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

Interests in companies

Section 371VH defines what it means for a person to have an "interest" in a company for the purposes of Part 9A of TIOPA 2010 (the controlled foreign companies rules), covering share capital, voting rights, distribution rights, control over income or assets, and indirect interests held through other companies.

• A person has an interest in a company if they hold (or are entitled to acquire) share capital, voting rights, or rights to distributions, or if they can direct how the company's income or assets are applied — including where it is merely reasonable to suppose they have that ability
• Future entitlements count as current interests, but entitlements that only arise on a default by the company or another person under an agreement are ignored unless that default has actually occurred
• Rights held purely as a loan creditor are generally disregarded when determining whether someone has an interest, except where the loan creditor has separated out embedded derivative rights from a loan relationship under generally accepted accounting practice — those separated derivative rights are not ignored
• Indirect interests are recognised: if a person has an interest in Company 1, and Company 1 has an interest in Company 2, the person is treated as having an interest in Company 2 proportionate to their interest in Company 1; joint interests held otherwise than in a fiduciary capacity are treated as held in equal shares