Page 24 - Finac2 Test 1 Slides - 1. Consolidated And Separate Financial Statements

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Illustration 4

• Q Ltd holds 48% of the voting rights in S Ltd, a listed company,

whose relevant activities are directed through voting rights.

The remaining voting rights are held by thousands of individual

shareholders.

• No other shareholder holds more than 1% of the voting rights

and no shareholders have collective voting agreements.

• Does Q Ltd have power over S Ltd?

• Taking into account the dispersion of other shareholders, Q Ltd’s voting
interest is sufficiently dominant for it to have the practical ability to

direct the relevant activities unilaterally

• Thus, Q Ltd would conclude that it has power over S Ltd

• What if…??

• A proxy had been elected to represent 20% of the other shareholders at shareholder
meetings?

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