(4)(i)A controlled company is any company which at any relevant time, was or would, if those provisions had always been in force, have been deemed to be, under the control of not more than five persons and which is not a subsidiary company or a company in which the public are substantially interested.Explanation. - For the purposes of this sub-section.-(a)A company shall be deemed to be a subsidiary company if, by reason of the beneficial ownership of shares therein, the control of the company is in the hands of the company not being a company to which the provisions of this sub-section apply, or of two or more companies none of which is a company to which the aforesaid provisions apply;(b)a company shall be deemed to be a company in which the public are substantially interested if shares of the company (not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) carrying not less than twenty five per cent.of the voting power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of year or other period for which the accounts of the company have been made up beneficially held by the public (not including a company to which the provisions of this sub-section apply) and any such shares have.In the course of such year or other period, been the subject of dealings on a recognised stock exchange or are in fact freely transferable by the holders to other members of the public.(ii)A company shall be deemed to be under the control of not more than five persons, -(a)if any five or fewer persons together exercise, or are able to exercise or are entitled to acquire, control, whether direct or indirect, over the company's affairs, and in particular, but without prejudice to the generality of the foregoing words, if any five or fewer persons together possess, or are entitled to acquire, the greater part of the share capital or voting power of the company; or(b)if any five or fewer persons together possess, or are entitled to acquire, either the greater part of the issued share capital of the company, or such part of that capital as work, if the whole of the income of the company were in fact distributed to the members, entitled them to receive the greater part of the amount so distributed; or(c)if, -(i)on the assumption that the company is a company to which this sub-section applies; or(ii)on the assumption that the company and any other company or companies are companies to which the said sub-section applies,more than one half of the income of the company (including any income which has been apportioned to it, or could on either of those assumptions be apportioned to it, of the purposes of said sub-section) could be apportioned for those purposes among not more than five persons.(iii)In determining whether a company is or is not under the control of not more than five persons, person who are relatives of one another, persons who are nominees of any other persons together with that other person, persons in partnership, and persons interested in any shares or obligations of the company which are subject to any trust or are part of the estate of a deceased person, shall respectively be treated as a single person.Explanation. - For the purpose of this clause, -(a)the expression "relative" means a husband, wife, ancestor, lineal descendant, brother or sister;(b)a person shall be deemed to be the nominee of another person, if, whether directly or indirectly, he possesses on behalf of that other person, or may be required to exercise on the direction of or on behalf of that other person, any right or power which, by virtue of any of the provisions of this sub-section, is material in determining whether a company is or is not to be deemed to be under the control of not more than five persons.(iv)An investment company shall be deemed to be under the control of not more than five persons if any five or fewer persons would, if the company were wound up, be entitled as members or loan creditors of the company to receive more than half of the assets of the Company which would be available for distribution to members and loan creditors.(v)Notwithstanding anything contained in clause (i), a company which is deemed for the purposes of that clause to be under the control of not more than five persons shall not be deemed to be a subsidiary company, unless it can be deemed to be under the control of not more than five persons only by including among the persons mentioned in sub-clauses (a), (b) or (c) of clause (ii) or in clause (iv) a company to which the provisions of the said clause (i) do not apply and which is not the nominee of any other person.(vi)The expression, "relevant time" in this sub-section means any time during the period ending with the death of the deceased and beginning at the date of the disposition, transfer or other transaction or event was one of associated operations, at the date of the earliest of those operations.
