close company

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close company

a UK resident company that is controlled by five or fewer participators together with their associates or by any number of participatory directors (together with their associates). Control is determined by the persons having the right to more than 50 per cent of the company's voting rights, share capital, distributable income, or assets on a winding up. A participator is widely defined to include anyone with a financial interest in the company, e.g. shareholders and debenture holders, but excludes those dealing with a company in the normal course of business, such as trade creditors and banks.

There are three potential consequences of close company status. First, any benefit provided for a participator, or an associate, which is not taxable as employment income will be treated as if it were a distribution of profit. As such, its cost will be disallowed in computing the company's profits and will be taxed as income in the hands of the recipient. Secondly, where a loan is made to a participator, or an associate, the company will be liable to pay an amount equal to 25 per cent of the loan to the revenue, unless the loan is repaid within nine months of the end of the accounting period. If the loan is repaid after that time, then the related amount of tax is repaid. Finally, if the company is a close investment company, it will have to pay the full rate of corporation tax regardless of the level of profit. This will happen unless it exists wholly or mainly for certain specified purposes, the main ones being the carrying on of a trade on a commercial basis or investing in land to be let out on a commercial basis to unconnected parties.

References in periodicals archive ?
His lawyer, Yves Haddad, said an investigating magistrate ordered the 72-year-old to stay in France and not meet any other former executives of the now closed company Poly Implant Prostheses (PIP).
Summary: AL GHARBIYA (WESTERN REGION) -- Two Asians were arrested for allegedly possessing 38 dud cheques with a forged signature drawn on a bank account of a closed company.
Al-Rawdatain is a closed company founded in November 1980 for the
The Finance Ministry has finalised the legal and administrative procedures of registering Bahrain Bourse as a Bahraini shareholding closed company with an authorised capital of BD10 million ($26.
Mofan, a 65-million share closed company, specializes in recycling as well as drilling for catalyst metals, as well as importing and producing raw materials.
About Dar Al-Dhabi Real EstateEstablished in 2007, Dar Al-Dhabi Real Estate Company is a Kuwaiti shareholding closed company whose core objective is to invest in diverse real estate opportunities in the Middle East region.
But in many cases it would mean reopening closed company schemes.
Gilliland, of Crookston, Glasgow, who has been with Rock Steady for more than five years, was told of his dismissal at a closed company meeting.