sec.74FIndirect interest

### sec.74F Indirect interest A relevant entity has an indirect interest in a corporation if the corporation is linked to another corporation (the directly controlled corporation ) in which the entity has a direct interest. It is possible for a relevant entity to have more than 1 indirect interest in a corporation. In that case, the relevant entity has an aggregate interest in the corporation under section 74G (1) (b) . Examples— The relevant entity has a direct interest in corporations A and B. Both corporations A and B have a direct interest in corporation C. The relevant entity has a direct interest in corporation A. Corporation A is linked to another corporation through more than 1 chain of corporations. A corporation is linked to the directly controlled corporation if the corporation is part of a chain of corporations— that starts with the directly controlled corporation; and in which a link is formed if a corporation has a direct interest in the next corporation in the chain. A relevant entity has a direct interest in corporation A (the directly controlled corporation). Corporation A has a direct interest in corporation B. Corporations A and B are linked and form part of a chain of corporations. Therefore, the relevant entity has a direct interest in corporation A, and an indirect interest in corporation B. Corporation B also has a direct interest in corporation C. Corporations B and C are linked to corporation A, and corporations A, B and C form part of a chain of corporations. The relevant entity has a direct interest in corporation A, and an indirect interest in corporations B and C. Corporation B also has a direct interest in corporation D. There are now 2 chains of corporations, 1 consisting of corporations A, B and C and the other consisting of corporations A, B and D. Corporations B, C and D are all linked to corporation A. The relevant entity has a direct interest in corporation A, and an indirect interest in corporations B, C and D. However, if a relevant entity had a direct interest in corporation C only, the entity would not have an indirect interest in corporation D because corporation D is not linked to corporation C. The value of a relevant entity’s indirect interest in a corporation (the indirectly controlled corporation ) that is linked to a directly controlled corporation is the percentage worked out by multiplying the following amounts— the value of the relevant entity’s direct interest in the directly controlled corporation; the value of each direct interest that forms a link in the chain of corporations by which the indirectly controlled corporation is linked to the directly controlled corporation. A relevant entity has a direct interest (with a value of 80%) in corporation A. Corporation A has a direct interest (with a value of 70%) in corporation B. The value of the relevant entity’s indirect interest in corporation B is 80% x 70% = 56%. For section 72 , the relevant entity has a controlling interest in corporation B. Corporation B also has a direct interest (with a value of 40%) in corporation C. The value of the relevant entity’s indirect interest in corporation C is 80% x 70% x 40% = 22.4%. For section 72 , the relevant entity does not have a controlling interest in corporation C. s 74F ins 2008 No. 16 s 15 (sec.74F-ssec.1) A relevant entity has an indirect interest in a corporation if the corporation is linked to another corporation (the directly controlled corporation ) in which the entity has a direct interest. It is possible for a relevant entity to have more than 1 indirect interest in a corporation. In that case, the relevant entity has an aggregate interest in the corporation under section 74G (1) (b) . Examples— The relevant entity has a direct interest in corporations A and B. Both corporations A and B have a direct interest in corporation C. The relevant entity has a direct interest in corporation A. Corporation A is linked to another corporation through more than 1 chain of corporations. (sec.74F-ssec.2) A corporation is linked to the directly controlled corporation if the corporation is part of a chain of corporations— that starts with the directly controlled corporation; and in which a link is formed if a corporation has a direct interest in the next corporation in the chain. A relevant entity has a direct interest in corporation A (the directly controlled corporation). Corporation A has a direct interest in corporation B. Corporations A and B are linked and form part of a chain of corporations. Therefore, the relevant entity has a direct interest in corporation A, and an indirect interest in corporation B. Corporation B also has a direct interest in corporation C. Corporations B and C are linked to corporation A, and corporations A, B and C form part of a chain of corporations. The relevant entity has a direct interest in corporation A, and an indirect interest in corporations B and C. Corporation B also has a direct interest in corporation D. There are now 2 chains of corporations, 1 consisting of corporations A, B and C and the other consisting of corporations A, B and D. Corporations B, C and D are all linked to corporation A. The relevant entity has a direct interest in corporation A, and an indirect interest in corporations B, C and D. However, if a relevant entity had a direct interest in corporation C only, the entity would not have an indirect interest in corporation D because corporation D is not linked to corporation C. (sec.74F-ssec.3) The value of a relevant entity’s indirect interest in a corporation (the indirectly controlled corporation ) that is linked to a directly controlled corporation is the percentage worked out by multiplying the following amounts— the value of the relevant entity’s direct interest in the directly controlled corporation; the value of each direct interest that forms a link in the chain of corporations by which the indirectly controlled corporation is linked to the directly controlled corporation. A relevant entity has a direct interest (with a value of 80%) in corporation A. Corporation A has a direct interest (with a value of 70%) in corporation B. The value of the relevant entity’s indirect interest in corporation B is 80% x 70% = 56%. For section 72 , the relevant entity has a controlling interest in corporation B. Corporation B also has a direct interest (with a value of 40%) in corporation C. The value of the relevant entity’s indirect interest in corporation C is 80% x 70% x 40% = 22.4%. For section 72 , the relevant entity does not have a controlling interest in corporation C. - 1 The relevant entity has a direct interest in corporations A and B. Both corporations A and B have a direct interest in corporation C. 2 The relevant entity has a direct interest in corporation A. Corporation A is linked to another corporation through more than 1 chain of corporations. - 1 The relevant entity has a direct interest in corporations A and B. Both corporations A and B have a direct interest in corporation C. - 2 The relevant entity has a direct interest in corporation A. Corporation A is linked to another corporation through more than 1 chain of corporations. - 1 The relevant entity has a direct interest in corporations A and B. Both corporations A and B have a direct interest in corporation C. - 2 The relevant entity has a direct interest in corporation A. Corporation A is linked to another corporation through more than 1 chain of corporations. - (a) that starts with the directly controlled corporation; and - (b) in which a link is formed if a corporation has a direct interest in the next corporation in the chain. - 1 A relevant entity has a direct interest in corporation A (the directly controlled corporation). Corporation A has a direct interest in corporation B. Corporations A and B are linked and form part of a chain of corporations. Therefore, the relevant entity has a direct interest in corporation A, and an indirect interest in corporation B. - 2 Corporation B also has a direct interest in corporation C. Corporations B and C are linked to corporation A, and corporations A, B and C form part of a chain of corporations. The relevant entity has a direct interest in corporation A, and an indirect interest in corporations B and C. - 3 Corporation B also has a direct interest in corporation D. There are now 2 chains of corporations, 1 consisting of corporations A, B and C and the other consisting of corporations A, B and D. Corporations B, C and D are all linked to corporation A. The relevant entity has a direct interest in corporation A, and an indirect interest in corporations B, C and D. However, if a relevant entity had a direct interest in corporation C only, the entity would not have an indirect interest in corporation D because corporation D is not linked to corporation C. - (a) the value of the relevant entity’s direct interest in the directly controlled corporation; - (b) the value of each direct interest that forms a link in the chain of corporations by which the indirectly controlled corporation is linked to the directly controlled corporation. - 1 A relevant entity has a direct interest (with a value of 80%) in corporation A. Corporation A has a direct interest (with a value of 70%) in corporation B. The value of the relevant entity’s indirect interest in corporation B is 80% x 70% = 56%. For section 72 , the relevant entity has a controlling interest in corporation B. - 2 Corporation B also has a direct interest (with a value of 40%) in corporation C. The value of the relevant entity’s indirect interest in corporation C is 80% x 70% x 40% = 22.4%. For section 72 , the relevant entity does not have a controlling interest in corporation C.