26 July 2010
For the applicability of Section 2(22)(e) requirement sought is the shareholder must be having not less than 10 % of the voting power. By application he does not get any voting right. Hence advance given to him by the Pvt Ltd Company will not be treated as deemed dividend.
27 July 2010
AGREED WITH EXPERTS. 9. Benficial owner of not less than 10% of the voting power
It is not the registered shareholder but the beneficial owner of the shares who is covered by the section 2(22)(e). Also the shareholding as on the date of the loan has to be considered. If preference shareholders are entitled to vote due to default in payment of dividend or in redemption, their holding will also have to be counted.
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