33Ownership interests in an eligible business entity

33 Ownership interests in an eligible business entity

(1) A licensee may hold ownership interests in a particular eligible business entity not exceeding in the aggregate an amount equal to 50%, or such higher percentage as the Board has approved in writing, of the total of the amounts of all ownership interests in the business entity. (2) Where a licensee holds ownership interests in a particular business entity in excess of those permitted by subsection (1) by reason of the failure of other persons holding partly paid shares to pay the amounts of calls upon those shares when those amounts became payable, the licensee shall notify the Board forthwith of the aggregate amount of the ownership interests held by the licensee in the business entity and submit to the Board for its approval a plan for reducing that aggregate amount to the amount permitted by subsection (1). (3) As soon as practicable after a licensee submits a plan to the Board under subsection (2), the Board shall, by notice in writing served on the licensee, inform the licensee of its decision whether or not to approve the plan, and, where the Board approves such a plan: (a) the Board shall specify in the notice the date by which the amount of the ownership interests held by the licensee in excess of the amount permitted by subsection (1) must be disposed of; and (b) from the date on which the licensee began to hold an amount of ownership interests in excess of the amount permitted by subsection (1) until the date specified in the notice, or such later date as the Board allows, subsection (1) shall be taken, for the purposes of this Act, to have had, and to have, effect, in relation to the aggregate amount of ownership interests held by the licensee in the business entity, as if there were substituted for the amount permitted by subsection (1) such higher amount as the Board specifies in the notice. (4) Notwithstanding subsection (1), where: (a) a licensee proposes to acquire an ownership interest in an eligible business entity (whether or not the licensee already holds an ownership interest in the business entity); and (b) immediately before the proposed acquisition, a person who holds a substantial ownership interest in the licensee also holds a substantial ownership interest in the business entity; the licensee shall not make the proposed acquisition if the proposed acquisition: (c) is to be made on terms other than ordinary commercial terms; (d) would have the result that the total of the amounts of the ownership interests held in the business entity by the licensee and by every person to whom paragraph (b) applies would exceed 50%, or such higher percentage as the Board has approved in writing, of the total of the amounts of all ownership interests in the business entity; or (e) would have the result that the total of the amounts of all ownership interests held by the licensee in eligible business entities in which persons who hold substantial ownership interests in the licensee also hold substantial ownership interests would exceed an amount equal to 20% of whichever amount is the greater of: (i) the approved capital of the licensee; or (ii) the shareholders’ funds of the licensee. (5) Notwithstanding subsection (1), a licensee, together with associates of the licensee, shall not, at any time within 10 years after the licensee first acquires an ownership interest in an eligible business entity, hold ownership interests in the business entity amounting to or exceeding 90% of the total of the amounts of all ownership interests in the business entity unless, at that time, one or more of the persons who held ownership interests in the business entity at the time when the licensee first acquired an ownership interest holds or hold an option to acquire, or options to acquire an aggregate of, 10% or more of the ownership interests in the business entity, being an option or options that may be exercised at any time before the expiration of that period of 10 years. (6) For the purposes of subsection (4), where: (a) a person holds a substantial ownership interest in a licensee; and (b) an associate of the person holds an ownership interest in an eligible business entity in relation to the licensee; the person shall be deemed to hold (but not to the exclusion of any other person) the ownership interest in the eligible business entity held by the associate. (7) In this section, associate, in relation to a person, means: (a) a parent or remoter lineal ancestor, a child or remoter issue, or a brother or sister, of the person (including a person who is such a relation by adoption) or the spouse of the person; (b) a partner of the person; (c) where the person is a company: (i) an officer of the company; (ii) an officer of a company that is related to the first mentioned company; or (iii) a person who holds a substantial ownership interest in the company; (d) an officer of a company of which the person is an officer; or (e) any person who is, by virtue of this subsection, an associate of any other person who is an associate of the person (including a person who is an associate of the person by another application or other applications of this paragraph). (8) For the purposes of subsection (7), the question whether companies are related to each other shall be determined in the same manner as the question whether corporations within the meaning of the Corporations Act 2001 are related to each other is determined under that Act.