(1). Q Ltd’s holding in G Ltd needs to be at least 75% for the two companies to be in a capital gains group. However, for all of the companies to be in a single such group, Q Ltd’s indirect interest in I Ltd needs to be more than 50%.
Accordingly, Q Ltd needs to increase its holding in G Ltd to more than 83.4%. Its indirect interest in I Ltd will then be more than 50% (83.4% x 80% x 75% = 50%).
(2). M Ltd would not be in a capital gains group with Q Ltd, J Ltd, K Ltd and L Ltd, because the effective interest of Q Ltd in M Ltd would be 48.96% (80% x 80% x 90% x 85%), which is less than 50%.
M Ltd would not be in a capital gains group with L Ltd because L Ltd is in a group with Q Ltd, J Ltd and K Ltd and cannot, therefore, be the principal member of its own group.