New queries, issue 4354

Associating spouses

How should the associated companies rules apply since ESC C9 was legislated?

The shareholdings of a husband (H) and wife (W) were always added together to determine common control but now that should only happen if the companies are ‘commercially interdependent’.

Suppose H and W have set up two companies operating in completely different markets.

H is the prime influence in one and W is the prime influence in the other but because they are married they help in each other’s business and share the ownership 2:1 and 1:2.

There are no loans or other factors that would give either spouse de facto control of both companies on their own.

Under the old rules the companies would be associated. Under the new rules they should only be associated if they are commercially interdependent and that depends on close financial ...