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- November 29, 2023 at 6:53 pm #695728
Inveresk has equity shareholdings in three other companies, as shown below, and has a seat on the board of each:
Inveresk Other shareholders
Raby 40% No other holdings larger than 10%
Seal 30% Another company holds 60% of Seal’s equity
Toft 15% Two other companies hold respectively 50% and 35% of Toft’s equity, and each has
a seat on its board. Inveresk exerts significant influence over ToftWhich of the above shareholdings are associates of Inversk?
A Raby only
B Raby and Seal only
C Raby and Toft only
D Raby, Seal and ToftAnswer C
Hello Sir, I am wondering why Seal is not considered an associate since Invesk holds >20% of its shares and has at least one seat on the board?
Thank you!
November 29, 2023 at 9:44 pm #695738Hi,
As the other entity owns 60% and has control of the business then we will not be able to exert any influence over the business and hence it not being an associate. An investment between 15% and 50% is a guideline for an associate but we need to ensure that it gives us significant influence. In this instance it doesn’t.
Thanks
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