Taxation (International and Other Provisions) Act 2010 section 371RB

Legal and economic control

Section 371RB sets out how to determine whether a person controls a company, using two tests: a "legal" control test based on shareholdings, voting power or constitutional documents, and an "economic" control test based on entitlement to disposal proceeds, income or assets.

• A person has legal control if they can direct a company's affairs through shareholdings, voting power, or powers in the company's articles of association or similar documents
• A person has economic control if they would receive over 50% of the company's disposal proceeds, distributed income, or assets on winding up — whether directly or indirectly and whether received at the time or later
• Rights held by a regulated bank acting in the ordinary course of its lending business are excluded when applying the economic control test, so bank-held shares and entitlements are stripped out of the calculation
• Two or more persons who together meet either the legal or economic control test are treated as controlling the company, even if they are not connected with each other