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Hi, excellent lectures – many thanks for putting them together.
Just wondering how the subsidiary/associate idea works where the largest single shareholder (‘B’) owns less than 50% of company A? Let’s say they own 49% and the three other shareholders (C, D and E) each own 17%.
Company A isn’t an associate of any of the three smaller companies who collectively own a majority of company A.
Is A treated simply as an associate of B? Or does B have any special status beyond that?
Thanks again.
Hi,
Glad you’ve enjoyed the lectures and thanks for the comments.
The key information with regards to obtaining control is whether we have the power to direct the operation of the company. Usually this means we need greater than 50% of the equity share capital, as will always be the case in FR, but we could own less and still have control as in the scenario you present above. If A has the overall voting rights through some statutory agreement then it will control the company and it will be consolidated.
Thanks
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