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7 1976

CORPORATION TAX ACT, 1976

PART X

Close Companies

Meaning of close company.

94. —(1) For the purposes of this Act, a “close company” is one which is under the control of five or fewer participators, or of participators who are directors, except that the expression does not apply—

(a) to a company not resident in the State, or

(b) to a registered industrial and provident society within the meaning of section 30 (industrial and provident societies), or to a building society within the meaning of section 31 (building societies), or

(c) to a company controlled by or on behalf of the State, and not otherwise a close company, or

(d) to a company falling within subsection (4) or section 95.

(2) For the purposes of this section—

(a) a company is to be treated as controlled by or on behalf of the State if, but only if, it is under the control of the State or of persons acting on behalf of the State, independently of any other person, and

(b) where a company is so controlled, it shall not be treated as being otherwise a close company unless it can be treated as a close company as being under the control of persons acting independently of the State.

(3) A company resident in the State (but not falling within subsection (1) (b)) is also a close company if, on a full distribution of its distributable income, more than half of it would fall to be paid, directly or indirectly, to five or fewer participators, or to participators who are directors.

(4) A company is not to be treated as a close company—

(a) if—

(i) it is controlled by a company which is not a close company, or by two or more companies none of which is a close company, and

(ii) it cannot be treated as a close company except by taking as one of the five or fewer participators requisite for its being so treated a company which is not a close company;

(b) if it cannot be treated as a close company except by virtue of paragraph (c) of section 102 (2) and it would not be a close company if the reference in that paragraph to participators did not include loan creditors who are companies other than close companies.

(5) References in subsection (4) to a close company shall be treated as applying to any company which, if resident in the State, would be a close company.

(6) If shares in any company (in this subsection referred to as the “first company”) are at any time after the 5th day of April, 1976, held on trust for a fund or scheme approved under section 222 or 229 of the Income Tax Act, 1967 , or for an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , then, unless the fund or scheme is established wholly or mainly for the benefit of persons who are, or are dependants of, employees or directors or past employees or directors of—

(a) the first company; or

(b) an associated company of the first company; or

(c) a company which is under the control of any director or associate of a director of the first company or of two or more persons each of whom is such a director or associate; or

(d) a close company;

the persons holding the shares shall, for the purposes of subsection (4), be deemed to be the beneficial owners of the shares and, in that capacity, to be a company which is not a close company.

Certain companies with quoted shares not to be close companies.

95. —(1) Subject to the provisions of this section, a company is not to be treated as being at any time a close company if—

(a) shares in the company carrying not less than 35 per cent. of the voting power in the company (and not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) have been allotted unconditionally to, or acquired unconditionally by, and are at that time beneficially held by, the public, and

(b) any such shares have within the preceding twelve months been the subject of dealings on a recognised stock exchange, and the shares have within those twelve months been quoted in the official list of a recognised stock exchange.

(2) Subsection (1) shall not apply to a company at any time when the total percentage of the voting power in the company possessed by all of the company's principal members exceeds 85 per cent.

(3) For the purposes of subsection (1), shares in a company shall be deemed to be beneficially held by the public if, and only if, they—

(a) fall within subsection (4), and

(b) are not within the exceptions in subsection (5),

and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.

(4) Shares fall within this subsection (as being beneficially held by the public)—

(a) if beneficially held by a company resident in the State which is not a close company, or by a company not so resident which would not be a close company if it were so resident, or

(b) if held on trust for a fund or scheme approved under section 222 or 229 of the Income Tax Act, 1967 , or for an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , or

(c) if they are not comprised in a principal member's holding.

(5) Shares shall not be deemed to be held by the public if they are held—

(a) by any director or associate of a director of the company, or

(b) by any company which is under the control of any such director or associate, or of two or more persons each of whom is such a director or associate, or

(c) by any associated company of the company, or

(d) as part of any fund the capital or income of which is applicable or applied wholly or mainly for the benefit of, or of the dependants of, the employees or directors, or past employees or directors, of the company, or of any company within paragraph (b) or (c).

References in this subsection to shares held by any person include references to any shares the rights or powers attached to which could, for the purposes of section 102, be attributed to that person under subsection (5) of that section.

(6) For the purposes of this section—

(a) a person is a principal member of a company if he possesses a percentage of the voting power in the company of more than 5 per cent. and, where there are more than five such persons, if he is one of the five persons who possess the greatest percentages or if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages, and

(b) a principal member's holding consists of the shares which carry the voting power possessed by him.

(7) In arriving at the voting power which a person possesses, there shall be attributed to him any voting power which, for the purposes of section 102, would be attributed to him under subsection (5) or (6) of that section.

(8) In this section “share” includes “stock”.

Certain expenses for participators and associates.

96. —(1) Subject to such exceptions as are mentioned in section 84 (matters to be treated as distributions) “distribution”, in relation to a close company, includes unless otherwise stated any such amount as is required to be treated as a distribution by subsection (2).

(2) Where a close company incurs expense in or in connection with the provision for any participator of living or other accommodation, of entertainment, of domestic or other services, or of other benefits or facilities of whatever nature, the company shall be treated as making a distribution to him of an amount equal to so much of that expense as is not made good to the company by the participator:

Provided that this subsection shall not apply to expense incurred in or in connection with the provision of benefits or facilities for a person to whom section 117 of the Income Tax Act, 1967 (benefits in kind), applies as a director or employee of the company, or the provision for the spouse, children or dependants of any such person of any pension, annuity, lump sum, gratuity or other like benefit to be given on his death or retirement.

(3) Any reference in subsection (2) to expense incurred in or in connection with any matter includes a reference to a proper proportion of any expense incurred partly in or in connection with that matter; and section 118 of the Income Tax Act, 1967 (valuation of benefits in kind), shall apply for the purposes of that subsection as it applies for the purposes of section 117 of the Income Tax Act, 1967 , references to that subsection being substituted for references to section 117 (1).

(4) Subsection (2) shall not apply if the company and the participator are both resident in the State and—

(a) one is a subsidiary of the other or both are subsidiaries of a third company also so resident, and

(b) the benefit to the participator arises on or in connection with the transfer of assets or liabilities by the company to him, or to the company by him.

(5) The question whether one company is a subsidiary of another for the purpose of subsection (4) shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—

(a) of any share capital which it owns directly in a company if a profit on a sale of the shares would be treated as a trading receipt of its trade; or

(b) of any share capital which it owns indirectly, and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt; or

(c) of any share capital which it owns directly or indirectly in a company not resident in the State.

(6) Where each of two or more close companies makes a payment to a person who is not a participator in that company, but is a participator in another of those companies, and the companies are acting in concert or under arrangements made by any person, then each of those companies and any participator in it shall be treated as if the payment made to him had been made by that company.

This subsection shall apply, with any necessary adaptations, in relation to the giving of any consideration, and to the provision of any facilities, as it applies in relation to the making of a payment.

(7) For the purposes of this section any reference to a participator includes an associate of a participator, and any participator in a company which controls another company shall be treated as being also a participator in that other company.

Interest paid to directors and directors' associates.

97. —(1) Subject to such exceptions as are mentioned in section 84 (1), this section has effect where in any accounting period, but not before the 6th day of April, 1976, any interest is paid by a close company to, or to an associate of, a person—

(a) who is a director of the close company, or of any company which controls, or is controlled by, the close company, and

(b) who has a material interest—

(i) in the close company, or

(ii) where the close company is controlled by another company, in that other company.

(2) If the total amount so paid to any person in the accounting period exceeds the limit imposed in his case, the excess shall be a distribution made by the close company to that person.

(3) The limit shall be calculated in the first instance as an overall limit applying to the aggregate of all interest which is within subsection (1) and which was paid by the close company in the accounting period, and, where there are two or more different recipients, that overall limit shall be apportioned between them according to the amounts of interest paid to them respectively.

(4) The overall limit shall be a sum equal to interest at 13 per cent. per annum or such other rate of interest as the Minister for Finance may from time to time prescribe on whichever is the smaller of—

(a) the total of the loans, advances and credits on which the interest within subsection (1) was paid by the close company in the accounting period, or if that total was different at different times in the accounting period, the average total over the accounting period, and

(b) the nominal amount of the issued share capital of the close company plus the amount of any share premium account (or other comparable account by whatever name called) of the company, taking both amounts as at the beginning of the accounting period.

(5) In this section “interest” includes any other consideration paid or given by the close company for the use of money advanced, or credit given, by any person, and references to interest “paid” shall be construed accordingly.

(6) This section has effect subject to section 96 (6), and for the purposes of this section a person has a material interest in a company if he, either on his own or with any one or more of his associates, or if any associate of his with or without any such other associates, is the beneficial owner of, or is able, directly or through the medium of other companies or by any other indirect means, to control, more than 5 per cent. of the ordinary share capital of the company.

Loans to participators, etc.

98. —(1) Subject to the following provisions of this section, where after the 5th day of April, 1976, a close company, otherwise than in the ordinary course of a business carried on by it which includes the lending of money, makes any loan or advances any money to an individual who is a participator in the company or an associate of a participator, the company shall be deemed, for the purposes of this section, to have paid in the year of assessment in which the loan or advance is made, an annual payment of an amount which, after deduction of income tax at the standard rate for the year of assessment in which the loan or advance is made, is equal to the amount of the loan or advance, and section 151 (income tax on payments) shall apply for the purposes of the charge, assessment and recovery of such tax:

Provided that the annual payment referred to in this subsection shall not be a charge on the company's income within the meaning of section 10 (allowance of charges on income).

(2) For the purposes of this section the cases in which a close company is to be regarded as making a loan to any person include a case where—

(a) that person incurs a debt to the close company, or

(b) a debt due from that person to a third party is assigned to the close company,

and then the close company shall be regarded as making a loan of an amount equal to the debt:

Provided that paragraph (a) shall not apply to a debt incurred for the supply by the close company of goods or services in the ordinary course of its trade or business unless the credit given exceeds six months or is longer than that normally given to the company's customers.

(3) Subsection (1) shall not apply to a loan made to a director or employee of a close company, or of an associated company of the close company, if—

(a) the amount of the loan, or that amount when taken together with any other outstanding loans which were made by the close company or any of its associated companies to the borrower, or to the wife or husband of the borrower, does not exceed £15,000,

(b) the borrower works full-time for the close company, or any of its associated companies, and

(c) the borrower does not have a material interest in the close company or in any associated company of the close company but if the borrower acquires such a material interest at a time when the whole or part of any such loan remains outstanding the close company shall be regarded as making to him at that time a loan of an amount equal to the sum outstanding.

(4) Where, after a company has been assessed to tax under this section in respect of any loan or advance, the loan or advance or any part of it is repaid to the company, relief shall be given from that tax, or a proportionate part of it, by discharge or repayment.

Relief under this subsection shall be given on a claim, which must be made within ten years from the end of the year of assessment in which the repayment is made.

(5) Where, under arrangements made by any person otherwise than in the ordinary course of a business carried on by him—

(a) a close company makes a loan or advance which, apart from this subsection, does not give rise to any charge on the company under subsection (1), and

(b) some person other than the close company makes a payment or transfers property to or releases or satisfies (in whole or in part) a liability of, an individual who is a participator in the company or an associate of a participator,

then, unless in respect of the matter referred to in paragraph (b) there falls to be included in the total income of the participator or associate an amount not less than the loan or advance, this section shall apply as if the loan or advance had been made to him.

(6) In subsections (1) and (5) (b), the references to an individual shall apply also to a company receiving the loan or advance in a fiduciary or representative capacity, and to a company not resident in the State.

(7) For the purposes of this section any participator in a company which controls another company shall be treated as being also a participator in that other company; and section 97 (6) shall apply for the purpose of determining whether a person has, for the purpose of subsection (3), a material interest in a company.

(8) Where on or after the 27th day of November, 1975, but not later than the 5th day of April, 1976, a close company makes any loan or advances any money to an individual who is a participator in the company or an associate of a participator, the company shall be deemed for the purposes of this section to have made the loan or advanced the money on the 6th day of April, 1976:

Provided that this subsection shall not apply to any loan or advance or any part of it which is repaid to the company before the 6th day of April, 1976.

Effect of release, etc., of debt in respect of loan under section 98.

99. —(1) Subject to the following provisions of this section, where a company is assessed or liable to be assessed under section 98 in respect of a loan or advance and releases or writes off the whole or part of the debt in respect of it, then—

(a) for the purpose of computing the total income of the person to whom the loan or advance was made a sum equal to the amount so released or written off shall be treated as income received by him after deduction of income tax by virtue of section 434 of the Income Tax Act, 1967 (at the standard rate for the year of assessment in which the whole or part of the debt was released or written off) from a corresponding gross amount;

(b) no repayment of income tax shall be made in respect of that income;

(c) notwithstanding paragraph (a), the income included by virtue of that paragraph in the total income of that person shall be treated for the purposes of sections 433 (yearly interest, etc., payable wholly out of taxed profits) and 434 (interest, etc., not payable out of taxed profits) of the Income Tax Act, 1967 , as not brought into charge to income tax;

(d) for the purposes of section 4 (e) of the Finance Act, 1974 (charge to tax of income from which tax has been deducted), but not for any other purpose, any amount which is to be treated as income by virtue of paragraph (a) shall be treated as if tax had been deducted therefrom at the standard rate for the year of assessment in which the whole or part of the debt was released or written off, provided that where such amount or the aggregate of such amounts, if more than one, exceeds the amount of the individual's taxable income charged at the standard rate or a higher rate the amount of the credit under the said section 4 (e) in respect of the excess shall not, notwithstanding anything in the said section 4, exceed the amount of the tax, if any, charged on that excess.

(2) If the loan or advance referred to in subsection (1) was made to a person who has since died, or to trustees of a trust which has come to an end, this section, instead of applying to the person to whom it was made, shall apply to the person from whom the debt is due at the time of release or writing off (and if it is due from him as personal representative within the meaning of Part XXIX of the Income Tax Act, 1967 (Income in relation to Administration of Estates), the amount treated as received by him shall accordingly be, as regards the higher rates of tax, included for the purposes of that Part in the aggregate income of the estate) and subsection (1) shall apply accordingly with the necessary modifications.

(3) Where under section 98 (8) a loan or advance is deemed to have been made on the 6th day of April, 1976, and before that date the company which made the loan or advance releases or writes off the whole or part of the debt in respect of it, then for the purposes of this section the amount released or written off shall be deemed to have been so released or written off on the 6th day of April, 1976.

(4) This section shall be construed together with section 98.

Distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc.

100. —(1) For the purposes of section 101 the distributions of a company for an accounting period shall be taken to be the aggregate of—

(a) any dividends which are declared for or in respect of the accounting period and are paid or payable during the accounting period or within eighteen months after the end of the accounting period, and

(b) all distributions, other than dividends, made in the accounting period.

(2) Where—

(a) a period of account for or in respect of which a company declares a dividend is not an accounting period,

(b) the dividend is paid or payable during the period of account or within eighteen months after the end of the period of account, and

(c) part of the period of account falls within an accounting period,

then, the proportion of the amount of the dividend to be treated for the purposes of subsection (1) as being for or in respect of the accounting period shall be the same as the proportion which the said part of the period of account bears to the whole of that period.

(3) For the purposes of subsection (4) the income of a company for an accounting period shall be the income for the accounting period, computed in accordance with the provisions of this Act, exclusive of franked investment income, before deducting—

(a) any loss incurred in any trade or profession carried on by the company which is carried forward from an earlier, or carried back from a later, accounting period,

(b) any excess of deficiencies over surpluses which if such excess were an excess of surpluses over deficiencies would be chargeable to corporation tax on the company under Case V of Schedule D and which is carried forward from an earlier, or carried back from a later, accounting period, and

(c) any loss which if it were a profit would be chargeable to corporation tax on the company under Case III or IV of Schedule D and which is carried forward from an earlier accounting period or any expenses of management or any charges on income which are so carried forward,

and after deducting—

(d) any loss incurred in the accounting period in any trade or profession carried on by the company,

(e) any loss incurred in the accounting period which if it were a profit would be chargeable to corporation tax on the company under Case III or IV of Schedule D,

(f) any excess of deficiencies over surpluses which if such excess were an excess of surpluses would be chargeable to corporation tax on the company for the accounting period under Case V of Schedule D,

(g) any amount which is an allowable deduction—

(i) against the total profits for the accounting period in respect of charges by virtue of section 10 (1), or

(ii) in computing the total profits for the accounting period in respect of expenses of management by virtue of section 15 (1), and

(h) the amount of the corporation tax which would be payable by the company for the accounting period if the tax were computed on the basis of the income arrived at in accordance with the preceding provisions of this subsection.

(4) In this section—

distributable income” of a company for an accounting period means the income as computed in accordance with subsection (3) increased by—

(a) the amount of the company's franked investment income for the accounting period reduced by the tax credit comprised in that income, and

(b) any reduction in the income arising in the accounting period made under section 176 (transitional relief for existing companies on cessation of trade, etc.) in respect of any source of income:

Provided that, where the aggregate of the amounts specified in paragraphs (d) to (g) of subsection (3) exceeds the income as computed in accordance with that subsection apart from the said paragraphs, the amount of the excess shall, in computing the amount of the distributable income, be deducted from the aggregate of the amounts specified in paragraphs (a) and (b);

investment income” of a company means income other than estate income which, if the company were an individual, would not be earned income within the meaning of section 2 of the Income Tax Act, 1967 , but does not include any interest or dividends on investments which would, having regard to the nature of the company's trade, fall to be taken into account as trading receipts in computing trading income but for the fact that they have been subjected to tax otherwise than as trading receipts, or but for the fact that, by virtue of section 2 (Irish resident company distributions not chargeable to corporation tax), they are not to be taken into account in computing income for corporation tax;

estate income” means income (other than yearly or other interest) which is chargeable to tax under Case III, IV or V of Schedule D, and which arises from the ownership of land (including any interest in or right over land) or from the letting furnished of any building or part of a building;

trading income” means income arising from a trade (including farming) or profession in respect of which a company is chargeable to corporation tax under Case I or II of Schedule D;

trading company” means any company which exists wholly or mainly for the purpose of carrying on a trade and any other company whose income does not consist wholly or mainly of investment or estate income.

(5) For the purposes of section 101—

distributable investment income” of a company for an accounting period means, in a case where the proviso to subsection (4) applies, the amount arrived at in accordance with the said proviso, and, in any other case, the sum of the following two amounts—

(a) the amount arrived at by applying to the amount of the distributable income exclusive of franked investment income (as reduced by the tax credit comprised in that income) the fraction /images/en.act.1976.0007.sec100.1.png

where—

A is the amount of the investment income taken into account in computing the tax mentioned in subsection (3) (h), and

B is the total amount of income so taken into account,

and

(b) the amount of the franked investment income (as reduced by the tax credit comprised in that income):

Provided that in the case of a trading company the distributable investment income shall be the amount arrived at in accordance with the foregoing provisions of this paragraph reduced by 5 per cent.;

distributable estate income” of a company for an accounting period means the amount arrived at by applying to the amount of the distributable income exclusive of franked investment income (as reduced by the tax credit comprised in that income) the fraction /images/en.act.1976.0007.sec100.2.png

where—

C is the amount of the estate income taken into account in computing the tax mentioned in subsection (3) (h), and

D is the total amount of income so taken into account:

Provided that in the case of a trading company the distributable estate income shall be the amount arrived at in accordance with the foregoing provisions of this paragraph reduced by 7.5 per cent.

(6) The amount for part of an accounting period of any description of income referred to in this section shall be a proportionate part of the amount for the whole period.

(7) Where a company is subject to any restriction imposed by law as regards the making of distributions, then regard shall be had to this restriction in determining the amount of income on which a surcharge shall be imposed under section 101.

Surcharge on close company's undistributed investment and estate income.

101. —(1) Where for an accounting period of a close company, the aggregate of the distributable investment income and the distributable estate income exceeds the distributions of the company for the accounting period, there shall be charged on the company for the accounting period an additional duty of corporation tax (referred to hereafter in this section as a surcharge) amounting to 20 per cent. of the excess:

Provided that—

(a) a surcharge shall not be made on the company where the excess is equal to or less than the smaller of the following amounts—

(i) £500, or, if the accounting period is less than twelve months, £500 proportionately reduced, and

(ii) where the company has one or more associated companies, £500 divided by one plus the number of those associated companies, or, if the accounting period is less than twelve months, £500 proportionately reduced divided by one plus the number of those associated companies;

(b) where the excess is greater than the smaller amount on which by virtue of paragraph (a) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to four-fifths of the amount by which the excess is greater than that smaller amount.

(2) Where the aggregate of—

(a) the accumulated undistributed income of the company at the end of the accounting period, and

(b) any amount which, on or after the 27th day of November, 1975, was transferred to capital reserves or was used to issue shares, stock or securities as paid up otherwise than for new consideration (as defined in Part IX) or was otherwise used so as to reduce the amount referred to in paragraph (a),

is less than the excess referred to in subsection (1), that subsection shall apply as if the amount of that aggregate were substituted for the said excess.

(3) The provisions of section 28 (4) (5) (reduction of corporation tax liability of small companies) shall apply for the purposes of subsection (1) as they apply for the purposes of section 28 (3).

(4) If any amount on which a surcharge is made on a company under this section is distributed, the tax credit in respect of the distribution shall, except where otherwise provided, be that provided for by section 88 (tax credit for certain recipients of distributions).

(5) A surcharge made under this section on a company for an accounting period shall be paid in one instalment within two months from the making of the assessment.

(6) The provisions of section 6 (5) (general scheme of corporation tax) and of Part XIV (Administration) shall apply in relation to a surcharge made under this section as they apply to corporation tax charged otherwise than under this section.

Meaning of “associated company” and “control”.

102. —(1) For the purposes of this Part a company is to be treated as another's “associated company” at a given time if, at that time or at any time within one year previously, one of the two has control of the other, or both are under the control of the same person or persons.

(2) For the purposes of this Part a person shall be taken to have control of a company if he exercises, or is able to exercise or is entitled to acquire, control, whether direct or indirect, over the company's affairs, and in particular, but without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire—

(a) the greater part of the share capital or issued share capital of the company or of the voting power in the company;

or

(b) such part of the issued share capital of the company as would, if the whole of the income of the company were in fact distributed among the participators (without regard to any rights which he or any other person has as a loan creditor), entitle him to receive the greater part of the amount so distributed; or

(c) such rights as would, in the event of the winding up of the company or in any other circumstances, entitle him to receive the greater part of the assets of the company which would then be available for distribution among the participators.

(3) Where two or more persons together satisfy any of the conditions of subsection (2), they shall be taken to have control of the company.

(4) For the purposes of subsection (2) a person shall be treated as entitled to acquire anything which he is entitled to acquire at a future date, or will at a future date be entitled to acquire.

(5) For the purposes of subsections (2) and (3), there shall be attributed to any person any rights or powers of a nominee for him, that is to say, any rights or powers which another person possesses on his behalf or may be required to exercise on his direction or behalf.

(6) For the purposes of subsections (2) and (3), there may also be attributed to any person all the rights and powers of any company of which he has, or he and associates of his have, control or any two or more such companies, or of any associate of his or of any two or more associates of his, including those attributed to a company or associate under subsection (5), but not those attributed to an associate under this subsection; and such attributions shall be made under this subsection as will result in the company being treated as under the control of five or fewer participators if it can be so treated.

Meaning of “participator”, “associate”, “director” and “loan creditor”.

103. —(1) For the purposes of this Part, a “participator” is, in relation to any company, a person having a share or interest in the capital or income of the company, and, without prejudice to the generality of the preceding words, includes—

(a) any person who possesses, or is entitled to acquire, share capital or voting rights in the company,

(b) any loan creditor of the company,

(c) any person who possesses, or is entitled to acquire, a right to receive or participate in distributions of the company (construing “distributions” without regard to section 96 or 97) or any amounts payable by the company (in cash or in kind) to loan creditors by way of premium on redemption, and

(d) any person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for his benefit.

In this subsection references to being entitled to do anything apply where a person is entitled to do it at a future date or will at a future date be entitled to do it.

(2) The provisions of subsection (1) are without prejudice to any particular provision of this Part requiring a participator in one company to be treated as being also a participator in another company.

(3) For the purposes of this Part “associate” means, in relation to a participator—

(a) any relative or partner of the participator,

(b) the trustee or trustees of any settlement in relation to which the participator is, or any relative of his (living or dead) is or was, a settlor (“settlement” and “settlor” having here the same meaning as in section 96 (3) (h) of the Income Tax Act, 1967 ), and

(c) where the participator is interested in any shares or obligations of the company which are subject to any trust or are part of the estate of a deceased person, any other person interested therein,

and has a corresponding meaning in relation to a person other than a participator:

Provided that paragraph (c) shall not apply so as to make an individual an associate as being entitled or eligible to benefit under a trust—

(i) if the trust relates exclusively to a fund or scheme approved under section 222 (exemption of superannuation funds) or 229 (approval of retirement benefits schemes) of the Income Tax Act, 1967 , or to an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 (Occupational Pension Schemes), or

(ii) if the trust is exclusively for the benefit of the employees, or the employees and directors, of the company or their dependants (and not wholly or mainly for the benefit of directors or their relatives) and the individual in question is not (and could not as a result of the operation of the trust become) either on his own or with his relatives the beneficial owner of more than 5 per cent. of the ordinary share capital of the company,

and in applying paragraph (ii) of this proviso, any charitable trusts which may arise on the failure or determination of other trusts shall be disregarded.

(4) In subsection (3) “relative” means husband, wife, ancestor, lineal descendant, brother or sister.

(5) For the purposes of this Part “director” includes any person occupying the position of director by whatever name called, any person in accordance with whose directions or instructions the directors are accustomed to act, and any person who—

(a) is a manager of the company or otherwise concerned in the management of the company's trade or business, and

(b) is, either on his own or with one or more associates, the beneficial owner of, or able, directly or through the medium of other companies or by any other indirect means, to control 20 per cent. or more of the ordinary share capital of the company.

(6) In subsection (5) (b), the expression “either on his own or with one or more associates” requires a person to be treated as owning or, as the case may be, controlling what any associate owns or controls, even if he does not own or control share capital on his own, and in paragraph (ii) of the proviso to subsection (3) the expression “either on his own or with his relatives” has a corresponding meaning.

(7) For the purposes of this Part “loan creditor”, in relation to a company, means a creditor in respect of any debt incurred by the company—

(a) for any money borrowed or capital assets acquired by the company, or

(b) for any right to receive income created in favour of the company, or

(c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium thereon),

or in respect of any redeemable loan capital issued by the company:

Provided that a person carrying on a business of banking shall not be deemed to be a loan creditor in respect of any loan capital or debt issued or incurred by the company for money lent by him to the company in the ordinary course of that business.

(8) A person who is not the creditor in respect of any debt or loan capital to which subsection (7) applies but nevertheless has a beneficial interest therein shall, to the extent of that interest, be treated for the purposes of this Part as a loan creditor in respect of that debt or loan capital.

Information.

104. —(1) The inspector may, by notice in writing, require any company which is, or appears to him to be, a close company to furnish him within such time (not being less than thirty days) as may be specified in the notice with such particulars as he thinks necessary for the purposes of this Part.

(2) If for the purposes of this Part any person in whose name any shares are registered is so required by notice in writing by the inspector, he shall state whether or not he is the beneficial owner of the shares and, if not the beneficial owner of the shares or any of them, shall furnish the name and address of the person or persons on whose behalf the shares are registered in his name.

(3) Subsection (2) shall apply in relation to loan capital as it applies in relation to shares.

(4) The inspector may, for the purposes of this Part, by notice in writing require—

(a) any company which appears to him to be a close company to furnish him with particulars of any bearer securities issued by the company and the names and addresses of the persons to whom the securities were issued and the respective amounts issued to each person; and

(b) any person to whom securities were issued as aforesaid, or to or through whom such securities were subsequently sold or transferred, to furnish him with such further information as he may require with a view to enabling him to ascertain the names and addresses of the persons beneficially interested in the securities.

In this subsection “securities” includes shares, stocks, bonds, debentures and debenture stock and also any promissory note or other instrument evidencing indebtedness issued to a loan creditor of the company.