2 Companies - Significant control over each other

[UKSBD]

Is this correct and allowable

COMP1 - COMP2 has significant control and owns over 75% of shares

COMP2 - COMP1 has significant control and owns over 75% of shares

Who is the actual owner?

 

[DWS]

Is this correct and allowable

COMP1 - COMP2 has significant control and owns over 75% of shares

COMP2 - COMP1 has significant control and owns over 75% of shares

Who is the actual owner?

I do not believe that the scenario you describe is legal
If Company 2 is a subsidiary of Company 1 then I do not think it is allowed to hold shares in Company 1

 

[Daybooks]

The owner of Co 1 is 75% Co 2 and 25% Others

The owner of Co 2 is 75% Co 1 and 25% Others

It would not have been possible on day 1 as one of the companies would not have existed but could by selling shares from subscribers to companies afterwards.

You therefore need to look at the beneficial owner(s).
Who is or are the ‘25% Other’ shareholders?

Look at the Persons with significant control (PSC) register which directors and other professional advisors (e.g. an accountant who is an authorised corporate service provider) have a duty to ensure is correct.

 

[UKSBD]

Looking in to it more

Company 2 is dormant, is an employee trust and owns 100% of the shares of Company 1

Company 1 then owns 100% shares of Company 2

It's a multi million £ company who have been around for years, so assume nothing dodgy going on.

Just a bit of clever accounting?

 

[Bobbo]

Looking in to it more

Company 2 is dormant, is an employee trust and owns 100% of the shares of Company 1

Company 1 then owns 100% shares of Company 2

It's a multi million £ company who have been around for years, so assume nothing dodgy going on.

Just a bit of clever accounting?

Company 2 is not an employee trust. Company 2 is acting as trustee for the Employee Ownership Trust in holding the shares legally in its name but beneficial ownership is with the Trust (thus its dormant).

Company 1 is then probably also acting as a nominee holding the shares in Company 2 (the EOT trustee company).

I don't know if those PSC entries are correct, as they seem to be simply looking at the legal ownership rather than beneficial.

 

[numbersrule]

It's called Circular Ownership Structure and there are rules about it in Section 136 of the Companies Act.

It can be OK under certain circumstances where a Trust is involved but it is a complex area of Company Law.

I wouldn't want to pretend to understand it and suggest proper Legal Advice may be needed.

Circular Ownership is the enemy of transparency.

 

[UKSBD]

It's called Circular Ownership Structure and there are rules about it in Section 136 of the Companies Act.

It can be OK under certain circumstances where a Trust is involved but it is a complex area of Company Law.

I wouldn't want to pretend to understand it and suggest proper Legal Advice may be needed.

Circular Ownership is the enemy of transparency.

Thanks, it doesn't effect or concern me.
I Was just intrigued about the set up.