This section which prevents the abuse of group relief provides that the relief will not be available unless the parent company not only satisfies the requirement of holding 75 per cent of the ordinary share capital but is also beneficially entitled to 75 per cent of the profits available for distribution to equity holders and to 75 per cent of the assets available for distribution to equity holders on a winding up. There is also a corresponding provision in relation to a consortium.

Fair enough.

What are you trying to get at there?

We are providing that it must have not merely 75 per cent of the holding but also that it is beneficially entitled to 75 per cent of the profits available. The two need not necessarily be the same. We want to see to it that a company is entitled to 75 per cent of profits available—this includes equity holders—and to 75 per cent of the assets available on the break up of the company.

(Dublin Central): What type of situation is the Minister envisaging where you have 75 per cent of the equity and not 75 per cent of the profits?

That can be provided for.

It could be a special class of equity shares.

What about trusts for children or something like that?

(Dublin Central): Can that not be transferred?

If you had a shareholding the dividend of which was flexible depending on the amount of profits, would that share be considered equity share or preferential share?

Sorry?

If you had a company which issued a higher dividend to, say, a preference share depending on the profit it made, would that share then be considered as an equity share or a preferential share?

A participating preference share.

Would it come into consideration on a 75 per cent basis?

That would not be ordinary share capital. That would be preference share capital.

Is the Deputy talking about preference shares?

Section 108 is complementary to section 107. In other words, whatever the set-up was for section 107 applies to section 108. In the case of a trust a person may own 75 per cent or 50 per cent of the equity and the remaining shares are held by trustees.

Trustees on behalf of certain beneficiaries.

Minors might be concerned. They might have control over the voting shares but they would not have the equities, or only a small amount of the equities.

What the Deputy visualises is that beneficial owners would have a different share of the profits from that represented by the holding of the shares. You would look to the beneficiary's situation to see how the benefit was shared.

In other words, that would happen for that reason?

Surely basically the shareholding is held by companies?

That is correct.