# Finance (No. 2) Act 2023, Section 242: Ownership interests and controlling interests

Extent: E+W+S+N.I.

(1) In this Part “ownership interest” means a direct ownership interest or an indirect ownership interest.
(2) An entity or an individual (“A”) has a direct ownership interest in an entity (“B”) if—
(a) A has an interest (whether by way of shares, other security or otherwise) that gives rise to a share of the profits, capital or reserves of B or of a permanent establishment of B (whether on the making of a distribution of profits, winding up or otherwise), and
(b) that interest is accounted for as equity in—
(i) where B is a member of a consolidated group, the consolidated financial statements of the ultimate parent of the group (ignoring any requirement to consolidate the assets, liabilities, income, expenses and cash flows of B in those statements), or
(ii) otherwise, B’s financial statements.
(3) An entity or an individual (“C”) has an indirect ownership interest in an entity (“D”) if C has a direct ownership interest in—
(a) an entity that has a direct ownership interest in D, or
(b) an entity that has (as a result of the single or repeated application of this subsection) an indirect ownership interest in D.
(4) An entity (“R”) has a controlling interest in another entity (“S”) if condition A or B is met.
(5) Condition A is that as a result of an ownership interest R has in S—
(a) R is required to consolidate the assets, liabilities, income, expenses and cash flows of S on a line-by-line basis in accordance with an acceptable ... accounting standard, or
(b) R would have been required to do so if R had prepared consolidated financial statements.
(6) Condition B is that S is a permanent establishment of R.

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Source: https://www.legislation.gov.uk/ukpga/2023/30/section/242 (the official version)
Page: https://openlegislation.uk/finance-no-2-act-2023/section-242
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.