When does a person control a company?

When does a person "control" a company?

A person is said to “control” a company if they have the power to control the company’s affairs or own more than half of the company’s shares, voting power, income, or assets. This control can be exerted by holding shares or having special voting powers that ensure the company operates according to their wishes. For example, if a person owns 101 out of 200 voting shares in a company, they have control over that company. The specifics of the voting power required to secure control are usually contained in the company’s articles of association or other documents.

Are casting votes taken into account?

Yes, casting votes are typically taken into account when determining a person’s control over a company. According to the cases of IRC v B W Noble Ltd, (1926) 12 TC 911 and IRC v Monnick Ltd, (1949) 29 TC 37, casting votes may be treated as part of the controller’s voting power. Similarly, votes exercised as a trustee may also be treated as part of the controller’s voting power as per the cases of Bibby (J) and Sons Ltd v IRC, (1945) 29 TC 167; John Shields and Co (Perth) Ltd v IRC, (1950) 29 TC 475 and IRC v Silverts Ltd, (1951) 29 TC 491. However, votes exercised as an attorney may not be treated as part of the controller’s voting power as per the case of IRC v James Hodgkinson (Salford) Ltd, (1949) 29 TC 395.