Control
An investor controls an investee when it has power over the investee, exposure or rights to variable returns and the ability to use that power to affect those returns. Power concerns current ability to direct relevant activities. Majority voting rights often establish control, but contractual arrangements and the practical effect of other rights can matter. Control determines whether an investee is a subsidiary.
Worked example
A parent with 80% of ordinary voting rights normally directs the relevant activities and consolidates the subsidiary.
Common mistake
Control is not defined solely as owning more than 50% of shares; distinguish voting power and substantive rights from nominal share percentages.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| ACCA | SBR | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |