What is a qualifying company: conditions for a qualifying company: examples of group situation and aggregation
The examples below show for which entities within different group structures the turnover and balance sheet totals must be aggregated.
A UK parent company wholly owns a UK incorporated subsidiary and a subsidiary incorporated in Germany. The UK subsidiary owns another subsidiary incorporated in the UK. The German subsidiary has a UK branch.
The subsidiary registered in Germany does not meet the first condition - it is not a company incorporated in the UK in accordance with the Companies Act 2006. It must not be part of the aggregation. It does not matter that it has a UK branch - the incorporation is the important factor.
So only the turnover and/or balance sheet totals of the three UK incorporated companies must be aggregated.
A US parent company wholly owns two companies incorporated in the UK. Each of those UK companies is parent to a UK group of companies.
The definition of a group is 51% ownership, see SAOG11240, by a company or other body corporate. The US parent owns both UK groups and so they are part of the same group. However, the US parent company does not meet the first condition - it is not incorporated in the UK in accordance with the Companies Act 2006. It must not be part of the aggregation.
So only the turnover and/or balance sheet totals of all the UK companies must be aggregated.
A US parent company wholly owns a UK incorporated company and a company that is registered in the US but managed and controlled in the UK. The UK incorporated company owns a UK group of companies and controls 50% of a UK incorporated joint venture.
There is a single group here but it does not contain the joint venture, in which the group does not have 51% ownership. The US parent and the US registered company do not satisfy the first condition - UK incorporation.
So only the turnover and/or balance sheet totals of the UK parent company and the UK group must be aggregated.
Note that the joint venture could be a qualifying company if it exceeds the turnover or balance sheet totals on its own.
A UK parent company wholly owns the share capital of a US registered company. The US company wholly owns two companies incorporated in the UK.
There is a single group but the UK incorporated elements of the group are ‘interrupted’ by a US registered company. The US company does not satisfy the first condition - UK incorporation.
The turnover and/or balance sheet totals of the UK parent company and the UK subsidiaries of the US company must be aggregated. It does not matter that the chain of ownership is interrupted by a non-UK incorporated company.
A US parent wholly owns the share capital in a UK company but not directly as a US LLC sits between it and the UK company. The US parent also indirectly is 51% owner of a second UK company which is parent to a UK group of companies. A UK LLP sits between the US parent and the second UK company. The ownership chain appears to be interrupted, but in the case of both the LLC and the LLP ownership is transparent and is deemed to be directly attributable to the US parent.
There is a single group comprising the first UK company and the second UK company together with its group members. Their turnover or balance sheet assets must be aggregated.
The US parent, the LLC and the LLP are not qualifying entities so are not included in the aggregation.
A qualifying UK group creates a new company Y which is incorporated in the UK on 20/03/2016. For the financial year ended 31/12/2016 the group must determine which companies within the group were qualifying or qualifying in aggregation by looking back to those companies that were group members at the end of the previous financial year. Y was neither a part of the group at 31/12/2015 nor did it have a previous financial year end before 31/12/2016 so it cannot be a qualifying company until financial year 2017 at the earliest, dependant on its results either on its own in the financial year 31/12/2016 or in aggregation with other group companies for the financial year to 31/12/2016.
A bank or private equity company holds over 50% of the shares of five UK incorporated companies. Together they form an SAO group and their individual turnover or balance sheet assets must be aggregated. The bank or private equity company should have appropriate systems in place to identify and advise the five companies of the position and their SAO obligations. However, the legal responsibility to notify the name of the SAO lies with the qualifying company itself, not with the owner of the shares.