2A.—(1) For the purposes of this Act, a company is a subsidiary of another company if (but only if)—

(a) that other company—

(i) holds a majority of the shareholders’ or members’ voting rights in the first-mentioned company, or

(ii) is a shareholder or member of that company and controls the composition of its board of directors, or

(iii) is a shareholder or member of that company and controls alone, in accordance with an agreement with other shareholders or members, a majority of the shareholders’ or members’ voting rights,

or

(b) that other company has the right to exercise a dominant influence over the first-mentioned company—

(i) because of provisions contained in its memorandum or articles, or

(ii) because of a control contract,

or

(c) that other company has a participating interest in the first-mentioned company and—

(i) that other company actually exercises a dominant influence over the first-mentioned company, or

(ii) that other company and the first-mentioned company are managed on a unified basis,

or

(d) the undertaking is a subsidiary of a company that is that other’s subsidiary company.

(2) In determining whether one company controls the composition of the board of directors of another company for the purposes of subsection (1)(a)(ii), section 155(2) of the Companies Act 1963 applies to companies that are subject to this Act in the same way as it applies to companies that are subject to that section.

(3) The following provisions apply for the purposes of paragraph (a) of subsection (1)(a):

(a) any shares held, or power exercisable—

(i) by a person as a nominee of that other company referred to in that paragraph, or

(ii) by, or by a nominee for, a subsidiary company of that other company (not being the subsidiary company whose shares or board of directors are involved),

are to be treated as held or exercisable by that other company;

(b) despite paragraph (a)—

(i) any shares held or power exercisable by that other company, or a subsidiary company of that other company, on behalf of a person or company that is neither that other company nor a subsidiary company of that other company is to be treated as not held or exercisable by that other company,

(ii) any shares held, or power exercisable, by that other company or by its nominee or subsidiary company are to be treated as not held or exercisable by that other company if they are held as security, but only if the power is, or the rights attaching to the shares are, exercised in accordance with instructions received from the person providing the security;

(c) any shares held or power exercisable by that other company or its nominee or subsidiary company are to be treated as not held or exercisable by that other company if the ordinary business of that other company or its subsidiary company includes lending money and those shares are held as security, but only if the power is, or the rights attaching to the shares are, exercised in the interest of the person who is providing the security.

(4) For the purposes of subsection (1)(a)(i) and (iii), the total of the voting rights of the shareholders or members in the subsidiary undertaking are to be reduced by the following:

(a) the voting rights attached to shares held by the subsidiary company in itself; and

(b) the voting rights attached to shares held in the subsidiary company by any of its subsidiary companies; and

(c) the voting rights attached to shares held by a person acting in his own name but on behalf of the subsidiary company or one of its subsidiary companies.

(5) For the purposes of subsection (1)(b), a company is not to be treated as having the right to exercise a dominant influence over another company unless it has a right to give directions with respect to the operating and financial policies of that other company and the directors of that other company are obliged to comply with those directions.

(6) In subsection (1)(b), "control contract" means a contract in writing conferring a right that—

(a) is of a kind authorised by the memorandum or articles of the company in relation to which the right is exercisable, and

(b) is permitted by the law under which that company is established.

(7) Subsection (5) does not limit the construction of the expression "actually exercises a dominant influence" in subsection (1)(c). ]