Controlled private companies 043-04010070

Is the company a designated private company?

• Yes, go to Step 2
• No, the company is not a controlled private company and the assessment of the customer's interest in the company will be in accordance with Pre 1 January 2002 rules for trusts and companies. Procedure ends here

• the number of shares with voting rights held by the customer, and
• the total number of shares with voting rights held by the customer's associates, and
• the total number of shares issued by the company with voting rights attached

Note: although it will generally be possible to determine the voting interests of the customer and their associates solely from the information on the Mod PC, it may be necessary at times to consider other factors such as:

• Depending on the type of vote, the customer and their associates may have more or less formal control at a general meeting. For example, on a show of hands each shareholder may have one vote regardless of the number of shares they hold with voting rights. Whereas, if the vote is a poll, each shareholder may have a number of votes in proportion to the number of shares they hold with voting rights
• The chair may decide when a poll is taken
• For the passing of a director's resolution, the chair may have the casting vote in addition to their other rights

If there is any doubt about whether or not a particular type of share provides voting rights, or further information is required in this respect, request the Constitution (or Memorandum and Articles of Association) for the company, or refer to the replaceable rules in the Corporations Act 2001.

• Add together the number of voting shares held by the customer and each of their associates
• Divide this figure by the total number of voting shares issued by the customer
• Multiply by 100 to obtain the percentage

This will determine the customer's and their associates' direct voting interest. If the percentage produced is 50 or greater the company is a controlled private company.

Is the company a controlled private company?

• Yes, go to Step 6
• No, go to Step 4

To determine if the customer and their associates hold a controlling interest of 15% in the income or capital, extract the following information from the Mod PC:

• the number of shares held by the customer with an interest in the distribution of capital or profits, or interest in the capital on wind-up
• the total number of shares held by the customer's associates with an interest in the distribution of capital or profits or interest in the capital on wind-up
• the total number of shares issued by the company with an interest in the distribution of capital or profits or interest in the capital on wind-up

Note: if there is any doubt as to who is the beneficial owner of the shares, obtain the latest return to the Australian Securities and Investments Commission (ASIC). This will show if shares are beneficially owned by the person whose name appears in the register of shareholders or not.

• Add together the number of shares held by the customer and each of their associates with an interest in the distribution of capital or profits
• Divide this number by the total number of shares issued by the company with an interest in the distribution of capital or profits
• Multiply by 100 to obtain the percentage

This will determine the customer's and their associates' controlling interest in the income or capital of the company. If the percentage produced is 15 or greater the company is a controlled private company.

Is the company a controlled private company?

• Yes, go to Step 6
• No, go to Step 5

The source test applies where a customer has transferred assets or services to a company after 7.30 pm AEST 9 May 2000. This test recognises that a customer transferring assets or services to a structure generally retains some means of control, and is used to determine if a company is under obligation or could reasonably be expected to act in accordance with the wishes of the customer. In determining if this control exists, the following issues should be considered:

• the relationship of the parties to each other, for example professional adviser, family or friends
• the existence of any written agreements between parties, for example, about use of accommodation or other company assets
• the nature and extent of any gift made by the customer to the private company, for example:
• the type of contribution such as home, car, cash
• the proportion that the value of the contribution has to total assets of the company at the time of the contribution
• the effect of the contribution on the financial position of the company
• if the customer received consideration of the contribution, the amount of consideration
• the nature of any benefit received by the customer from the company, for example, use of a motor vehicle or holiday home of the company

See Formal control of a company and Informal control test for further information.

Is the company a controlled private company?

• Yes, go to Step 6
• No, the company is not a controlled private company and the assessment of the customer's interest in the company will be in accordance with Pre 1 January 2002 rules for trusts and companies. Procedure ends here.

If the company is a controlled private company, see Attributable stakeholders for private companies to determine if the customer is an attributable stakeholder.