A Limited directly owns 90% of the ordinary share capital of B Limited, and 60% of the ordinary share capital of C Limited.  B Limited directly owns 40% of the ordinary share capital of C Limited.  For the purposes of S151(4) assume all entitlements follow share capital. Without the inclusion of indirect ownership A and B are in the same group (because B is a 75%+ subsidiary of A), but C would not be part of the group (because it does not form the relationship of a 75% subsidiary nor the common 75% subsidiary of a third company).  To remedy this the legislation looks at indirect ownership and combining multiple chains of ownership. Ss1155 and 1156 treat A as indirectly owning the ordinary share capital owned (directly or indirectly) by B, including its shares in C.  Here, the formula would be; Fraction of share capital owned by A in B x Fraction of share capital owned by B in C, or 90% x 40% = 36% So A directly owns 60% of C, and indirectly owns 36% of C (through B).  S1157 then require that these fractions be added together to give A's total holding of C: 96%. 

96% is sufficient to create a group relationship, so A, B, and C are all in a group for group relief purposes. Registered industrial and provident societies can be subsidiaries for the purpose of group relief, as well as owners of subsidiaries. 

In deciding whether a company is a '75% subsidiary', shareholdings owned directly or