De Beers Case Summary

Case Law Overview: Management and control of a company and its residence in relation to corporation tax.

Case Study: De Beers Consolidated Mines Ltd v Howe

• Facts:

• Foreign company incorporated in South Africa.

• Head office in Cape Colony, South Africa, with a branch in London.

• Owned extensive diamond mines in South Africa, with main business operations focusing on diamond sales to a London syndicate.

• Annual contracts for diamonds executed in London.

• Company Meetings:

• General meetings held in Cape Colony.

• Control vested in a board of 3 life governors and 16 ordinary directors.

• Majority of governance (2 out of 3 governors and 9 out of 16 directors) resided in the UK, particularly in London.

Key Legal Finding:

• Directors in South Africa never overruled decisions made by directors in London, indicating that control was effectively exercised from the UK.
• Conclusion: The company was deemed resident in the UK for tax purposes despite incorporation in South Africa due to the location of management and control.