Page 25 - PowerPoint Presentation

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Illustration 5

• Z Ltd holds 40% of the voting rights in Y Ltd, whose relevant
activities are directed through voting rights. The remaining

voting rights are widely dispersed amongst shareholders who

do not individually own more than 1% of the voting rights.

• However, some of the shareholders with common interests

have a collective voting agreement in terms of which their

votes are cast in aggregate by a nominated representative. The

aggregate of those voting rights represents 52% of the voting

rights in Y Ltd.

• Does Z Ltd have power over Y Ltd?

• The collective voting agreement warrants consideration of the voters it
represents as an organised group of voters

• The organised group of voters control 52% of the voting rights in Y Ltd

• Thus, they are able to prevent Z Ltd from directing the relevant
activities of Y Ltd

• Therefore, Z Ltd does not have power over Y Ltd, even though it is the

single largest shareholder
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