TOPIC:COMPANY CLASSIFICATIONS

SUBJECT: TAXATION

You are the tax consultant of Thuthuka Consultants (Pty) Ltd.

You have been approached to assist the client to determine whether they are a public company or a private company for tax purposes.

The company, Cell Technologies (Pty) Ltd is not quoted on the stock exchange.

The shareholder's register revealed the following shareholding:

1.) 5% PREFERENCE SHARES:

• 20% each is held by both Mr PwC as well as Mr Puma.

• Namdeb Mining Ltd, a diamond mining company, as well as Mr Nike hold 5% each of the preference shares.

• 20% of the preference shares are held by Mr Anderson.

• 28% is held by Samsung (Pty) Ltd.

• 2% is held by Mr Forbes, the director of Cell Technologies (Pty) Ltd.

2.) ORDINARY SHARES:

• Each of the following shareholders hold each 2% of the ordinary shares; Sunshine Gold (Pty) Ltd, a gold mining company, Mr Forbes, Mrs Nike (Director of Cell Technologies (Pty) Ltd), Mr Puma (Director of Cell Technologies (Pty) Ltd), Namdeb Mining Ltd and City of Windhoek.

• The minor of Mr Nike holds 10% of the ordinary shares.

• Mr KFC, Mr PwC as well as Mrs Puma (the wife of Mr Puma) each hold 5%.

• Outsurance international (Pty) Ltd, an insurance company holds 5%.

• Mr Anderson holds 3%

• Apple (Pty) Ltd holds 30%, of which the shareholding in Apple (Pty) Ltd is held as follows:

i.) Mr Anderson holds 35% in Apple (Pty) Ltd

ii.) Mr McGregor holds 15% in Apple (Pty) Ltd

iii.) Mr Clayton holds 50% in Apple (Pty) Ltd

• Samsung (Pty) Ltd holds 25%, of which the shareholding in Samsung (Pty) Ltd is held as follows:

i.) Mr Forbes holds 20% in Samsung (Pty) Ltd

ii.) Mrs PwC (Wife of Mr PwC) holds 50% in Samsung (Pty) Ltd

iii.) Mr KPMG holds 30% in Samsung (Pty) Ltd

REQUIREMENTS:

Determine whether or not Cell Technologies (Pty) Ltd will be classified as a public or private company for tax purposes. (25 marks)