Australian Capital Territory Current Acts Australian Capital Territory Current Acts(1) An entity has an indirect interest in a corporation if the corporation is linked to another corporation (the directly controlled corporation ) in which the entity has a direct interest.
(2) A corporation is linked to a directly controlled corporation if the corporation is part of a chain of corporations—
(a) that starts with the directly controlled corporation; and
(b) in which a link in the chain is formed if a corporation has a direct interest in the next corporation in the chain.
Example
Corporation A (a directly controlled corporation) has a direct interest in corporation B. Corporations A and B form part of a chain of corporations, and corporation B is linked to corporation A. Accordingly, an entity that has a direct interest in corporation A also has an indirect interest in corporation B.
Corporation B also has a direct interest in corporation C. In this case, corporations A, B and C form part of a chain of corporations. Both corporations B and C are linked to corporation A. The entity that has a direct interest in corporation A has an indirect interest in both corporations B and C.
Corporation B also has a direct interest in corporation D. There are now 2 chains of corporations, 1 consisting of A, B and C, and 1 consisting of A, B and D. Corporations B, C and D are all linked to corporation A and an entity that has a direct interest in corporation A would have an indirect interest in corporations B, C and D. An entity that has a direct interest in corporation B would have an indirect interest in corporations C and D. However, an entity that has a direct interest in corporation C only would not have an indirect interest in corporation D, as corporation D is not linked to corporation C.
(3) The value of the indirect interest of an entity in a corporation (an indirectly controlled corporation ) that is linked to a directly controlled corporation is worked out by multiplying together the following:
(a) the value of the direct interest of the entity in the directly controlled corporation;
(b) the value of each direct interest that forms a link in the chain of corporations by which the indirectly controlled corporation is linked to the directly controlled corporation.
Example
An entity has a direct interest (with a value of 80%) in corporation A. Corporation A has a direct interest (with a value of 70%) in corporation B. The value of the indirect interest of the entity in corporation B is 80% × 70% (that is, 56%). Accordingly, the entity has a controlling interest in corporation B under s 73 (Groups arising from tracing of interests in corporations).
Corporation B also has a direct interest (with a value of 40%) in corporation C. The value of the indirect interest of the entity in corporation C is 80% × 70% × 40% (that is, 22·4%). Accordingly, the entity does not have a controlling interest in corporation C.
(4) It is possible for an entity to have more than 1 indirect interest in a corporation.
Examples
1 An entity may have more than 1 indirect interest in a corporation if the corporation is linked to more than 1 corporation in which the entity has a direct interest.
2 An entity may have more than 1 indirect interest in a corporation if the corporation is linked to only 1 corporation in which the entity has a direct interest, but is linked through more than 1 chain of corporations. In this case, the entity has an aggregate interest in the corporation (see s 78).