Capital Allowances Act 2001 section 212E

Principal companies

Section 212E defines what it means for a company to be a "principal company" of another company (referred to as "C"), covering both group relationships based on 75% subsidiary ownership and consortium ownership arrangements.

• A company is a principal company of C if it sits at the top of a chain of 75% qualifying subsidiary ownership that includes C — meaning it is the ultimate parent that is not itself a 75% subsidiary of any other company.
• The definition traces upwards through any number of intermediate holding companies: if C is a 75% subsidiary of one company, which is itself a 75% subsidiary of another, you keep going up until you reach a company that is not a 75% subsidiary of anyone else — that top company is the principal company.
• A company can also be a principal company of C through a consortium route — either where C is owned by a consortium, or where C is a 75% subsidiary of a company owned by a consortium, and the consortium member (or its ultimate parent) is not itself a 75% subsidiary of another company.
• A company that qualifies as a principal company of C through the consortium route is specifically labelled a "consortium principal company" of C — a distinction that matters for the application of other provisions in this part of the Act.