Page 21 - Finac II - Joint Arranagements

JOINT ARRANGEMENTS

Basic Example 1

• H Ltd and J Ltd are two separate companies which have

combined their expertise and resources to develop a

computer package to compile timetables for schools.

• The contractual arrangement between H Ltd and J Ltd

specifies that at least 51% of the voting rights are required to

make decisions about the relevant activities of the

arrangement. Even though H Ltd can block any decision, it
does not control the arrangement because it needs the

agreement of J Ltd.

• The terms of their contractual arrangement requiring at least

51% of the voting rights to make decisions about the

relevant activities, imply that H Ltd and J Ltd have joint

control of the arrangement because decisions about the

relevant activities of the arrangement cannot be made

without both H Ltd and J Ltd agreeing. 21