Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_6:p17
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 6 (pt 17/26)
Character Range: 217450–220132

and subsidiary members of a MEC group

 (1) The head company of a *MEC group is worked out under section 719‑75.

 (2) The remaining members of the group are the subsidiary members of the group.

719‑30  Treating entities as wholly‑owned subsidiaries by disregarding employee shares

 (1) The object of this section is to ensure that an entity is not prevented from being a *wholly‑owned subsidiary of another entity, just because there are minor holdings of *shares in a company issued under *arrangements for employee shareholdings.

 (2) For the purposes of this Division, in determining whether an entity is a wholly‑owned subsidiary of another entity, disregard particular *shares in a company if:
 (a) the shares are covered by subsection (3); and
 (b) the total number of those shares is not more than 1% of the number of ordinary shares in the company.

 (3) A *share in a company is covered by this subsection if the share is beneficially owned by an entity and:
 (a) the entity acquired (as defined in section 139G of the Income Tax Assessment Act 1936) the share either:
 (i) in the circumstances described in subsection 139C(1) or (2) of that Act; or
 (ii) by exercising a right the entity acquired (as so defined) in those circumstances; and
 (b) all the shares in the company available for acquisition in those circumstances are ordinary shares and all the rights available for acquisition in those circumstances are rights to acquire ordinary shares; and
 (c) if the entity acquired the share in those circumstances—at the time of the acquisition, at least 75% of the permanent employees (as defined in section 139GB of that Act) of the employer (as defined in section 139GA of that Act) were or had earlier been entitled to acquire in those circumstances:
 (i) shares in the company or rights to acquire shares in the company; or
 (ii) shares in a holding company (as defined in section 139GC of that Act) of the company or rights to acquire such shares; and
 (d) the conditions in subsections 139CD(6) and (7) of that Act are met in relation to the acquisition of the share by the entity; and
 (e) the company is not covered by section 139DF of that Act.

Note: Section 139CD of the Income Tax Assessment Act 1936 sets out certain preconditions for shares and rights acquired under employee share schemes to be qualifying shares and qualifying rights. Section 139C of that Act explains when a share or right is acquired under an employee share scheme. Section 139DF prevents shares and rights relating to certain companies from being qualifying shares and rights.

 (4) A *share may be disregarded under subsection (2) even though the condition in paragraph (3)(c)