Companies Act 1993

Preliminary

8: Certain matters to be disregarded

You could also call this:

“Rules for determining if a company is a subsidiary of another”

When you’re trying to figure out if a company is a subsidiary of another company, there are some things you need to know. You should ignore shares that the other company holds or powers it can use if it’s just looking after them for someone else. This is called acting in a ‘fiduciary capacity’.

However, you should count shares or powers that the other company has through someone acting for them, or through one of their own subsidiaries, unless that subsidiary is just looking after the shares for someone else too.

You should also ignore any shares or powers that come from the company’s debentures or from a trust deed that’s there to secure debentures. Debentures are a type of loan that a company can take out.

There’s one more special case to remember. If the other company or its subsidiary usually lends money as part of its normal business, and it’s holding shares or has powers just as security for a loan it made in its normal business, then you shouldn’t count those shares or powers either.

All these rules help make sure you’re counting the right things when you’re working out if one company is a subsidiary of another.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320104.

Topics:
Business > Industry rules
Business > Starting a business
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Part 1 Preliminary

8Certain matters to be disregarded

  1. In determining whether a company is a subsidiary of another company,—

  2. shares held or a power exercisable by that other company in a fiduciary capacity are not to be treated as held or exercisable by it:
    1. subject to paragraphs (c) and (d), shares held or a power exercisable—are to be treated as held or exercisable by that other company:
      1. by a person as a nominee for that other company, except where that other company is concerned only in a fiduciary capacity; or
        1. by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only in a fiduciary capacity,—
        2. shares held or a power exercisable by a person under the provisions of debentures of the company or of a trust deed for securing an issue of debentures shall be disregarded:
          1. shares held or a power exercisable by, or by a nominee for, that other company or its subsidiary (not being held or exercisable in the manner described in paragraph (c)) are not to be treated as held or exercisable by that other company if—
            1. the ordinary business of that other company or its subsidiary, as the case may be, includes the lending of money; and
              1. the shares are held or the power is exercisable by way of security only for the purposes of a transaction entered into in the ordinary course of that business.
              Compare
              • Corporations Act 1989 s 48 (Aust)