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    Question

    Investor A holds 42% of voting rights in TargetCo; the

    remaining shares are widely dispersed with no other holder above 3%. Investor A also has substantive rights to appoint key management and provides essential funding via an exclusive facility. Historic meetings show passive minority participation and A’s proposals always pass. Should Investor A consolidate TargetCo and on what basis?
    A No—control requires >50% voting rights. Correct Answer Incorrect Answer
    B Yes—de-facto control via dominant voting interest and dispersion of others. Correct Answer Incorrect Answer
    C No—funding arrangements are protective rights only. Correct Answer Incorrect Answer
    D Yes—power via potential voting rights only. Correct Answer Incorrect Answer
    E No—needs a board majority plus >50% votes. Correct Answer Incorrect Answer

    Solution

    Control under Ind AS 110 focuses on power over relevant activities, exposure to variable returns, and ability to affect those returns. With dispersed others, consistent decision-making power, and substantive rights/funding dependence, A likely has de-facto control and must consolidate.

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