Page 22 - UNISA Test 2 Slides - Joint Arranagemenst (Finac2)

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.

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