What do you mean by indirect interest?

Equity capital markets (ECM)

This is a question I often get when seeking information from directors and key senior management on their shareholding to be disclosed in prospectus.

The following are situations I usually encounter where a person is deemed to have indirect interest in shares:

– A director of a company is deemed to have interest in the shares of the company held by the director’s spouse, who is not a director of the company.

– A director of a company is also deemed to have interest in the shares of the company held the director’s child, including adopted child or stepchild, who is not a director of the company.

– A person is deemed to have interest in a share of Company A which is held by Company B where that person and/or his associates are entitled to exercise or control the exercise of not less than 20% of the votes attached to the voting shares in Company B.

– A person is deemed to have interest in a share of which he is not the registered holder, where he is entitled to exercise or control the exercise of a right attached to the share (otherwise than being appointed as a proxy to vote at members’ meeting).

The above is not exhaustive. See s 8 and s 59(11) of the Companies Act 2016.

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This post was first posted on Linkedin on 2 March 2021.

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