835AA Associated enterprises.

(1) In this section—

“non-consolidating entity” means an entity which is valued, or would be so valued if consolidated financial statements were prepared under international accounting standards, in consolidated financial statements—

(a) using fair value accounting (within the meaning of international accounting standards), or

(b) on the basis that it is an asset held for sale or held for distribution (within the meaning of international accounting standards);

“significant influence in the management of” , in relation to an entity, means the ability to participate, on the board of directors or equivalent governing body of the entity, in the financial and operating policy decisions of that entity, including where that power does not extend to control or joint control of that entity.

(2) In this Part, two enterprises shall be “associated enterprises” in respect of each other—

(a) if one enterprise, directly or indirectly, possesses or is beneficially entitled to—

(i) where the other enterprise is an entity having share capital, not less than 25 per cent of the issued share capital of the other enterprise, or

(ii) where the other enterprise is an entity not having share capital, an interest of not less than 25 per cent of the ownership rights in the other enterprise,

(b) if one enterprise, directly or indirectly, is entitled to exercise not less than 25 per cent of the voting power in the other enterprise, where that other enterprise is an entity,

(c) if one enterprise (in this paragraph referred to as the “first- mentioned enterprise” ), directly or indirectly, holds such rights as would—

(i) where the other enterprise is a company, if the whole of the profits of that other enterprise were distributed, entitle the first- mentioned enterprise, directly or indirectly, to receive 25 per cent or more of the profits so distributed, or

(ii) where the other enterprise is an entity other than a company, if the share of the profits of that other enterprise to which the first- mentioned enterprise is entitled, directly or indirectly, is 25 per cent or more,

(d) where there is another enterprise in respect of which the two enterprises are, in accordance with paragraph (a), (b) or (c), an associated enterprise,

(e) where both enterprises are entities that are—

(i) not non-consolidating entities, and

(ii) included in the same consolidated financial statements prepared under—

(I) international accounting standards, or

(II) Irish generally accepted accounting practice,

(f) where both enterprises—

(i) are entities that are—

(I) not included in consolidated financial statements, or

(II) included in consolidated financial statements prepared other than under an accounting practice referred to in paragraph (e)(ii),

(ii) are not non-consolidating entities, and

(iii) would, if consolidated financial statements were prepared under the accounting practice referred to in paragraph (e)(ii)(I), be included in the same consolidated financial statements,

or

(g) where one enterprise has significant influence in the management of the other enterprise.

(3) Where an enterprise (in this subsection referred to as the “first- mentioned enterprise” ) acts together with another enterprise (in this subsection referred to as the “second-mentioned enterprise” ) with respect to voting rights, share ownership rights or similar ownership rights, the first-mentioned enterprise shall be treated, for the purposes of paragraphs (a), (b) and (c) of subsection (2), as possessing, holding or being entitled to, as the case may be, the rights of the second- mentioned enterprise.

(4) For the purposes of paragraphs (a), (b) and (c) of subsection (2), there shall be attributed to an enterprise any rights or powers of a nominee for such enterprise, that is, any rights or powers which another enterprise possesses on such enterprise’s behalf or may be required to exercise on such enterprise’s direction or behalf.

(5) For the purposes of—

(a) Chapter 2,

(b) Chapter 3,

(c) Chapter 8, and

(d) the application of this Part to hybrid entities,

a reference, in subsection (2), to “25 per cent” shall be construed as a reference to “50 per cent” .

(6) References in this Part to a transaction between associated enterprises shall include a reference to a transaction in respect of which the enterprises concerned are or were associated enterprises at the time—

(a) the transaction was entered into,

(b) the transaction was formed, or

(c) a payment arises under the transaction.