Page 22 - PowerPoint Presentation

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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