Definition Of Control In Consolidation Exercise

Definition Of Control Under IAS 27

1. IAS 27 defines control as “ the power to govern the financial and operating policies of an enterprise so as to derive benefits from its activities”

2. Control is presumed to exist when the investor owns, directly or indirectly more than one half of the voting power of an investee.

3. IAS 27 set out the situations where control is present even though the investor owns less than one half of the voting power of the investee company:

(a) power over more than one half of the voting rights by virtue of an agreement with other investors;

(b) power to govern the financial and operating policies of the company under statute or an agreement;

© power to appoint or remove the majority of the members of the board of directors or equivalent governing body;

(d) power to cast the majority of votes at meetings of the board of directors or equivalent governing body.