Controlling interest depends on majority vote-carrying shares; a revocable voting agency does not transfer that control.

Control of a company under the Excess Profits Tax Act depends on ownership of the majority of vote-carrying shares. Directors may have a controlling interest where they are the registered holders of those shares, even if the beneficial interest lies elsewhere. But a director who merely votes shares as another shareholder's agent under a revocable authority does not acquire those shares or the controlling interest, because the shares remain vested in and subject to the shareholder's will. On that reasoning, the directors were held not to have a controlling interest in the respondent company, and the question was answered in the negative.

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Issues: Whether the directors of the respondent company had a controlling interest in the company within the meaning of the Excess Profits Tax Act.

Analysis: Control of a company for this purpose lies in the majority of the vote-carrying shares. Where directors themselves are the registered holders of such shares, they may be said to have a controlling interest even if the beneficial interest is elsewhere. But where the majority shares remain registered in the name of another shareholder and a director merely votes as that shareholder's agent under a revocable authority, the shares do not become the director's shares and remain subject to the shareholder's will. In such a case, the controlling interest continues to vest in the shareholder and not in the agent who exercises the votes.

Conclusion: The directors did not have a controlling interest in the respondent company; the question referred was answered in the negative and the appeal succeeded.

Ratio Decidendi: For the purpose of determining controlling interest, the decisive factor is ownership of the majority of vote-carrying shares, and an agent authorised to vote those shares does not acquire the controlling interest where the shares remain vested in and revocable by the shareholder.

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