Tree Corporation can influence the decisions of Root Ltd., but Root is not a subsidiary of Tree Corporation.What level of influence must Tree Corporation have over Root Ltd.?

Question

Quizplus · Accepted Answer

The best choice is significant influence because it implies that Tree Corporation has the ability to influence but not necessarily control the decisions of Root Ltd. This level of influence would likely give Tree Corporation the ability to have representation on the board of Root Ltd. or other forms of involvement in decision-making. A passive investment would indicate that Tree Corporation is merely a shareholder with no ability to influence decisions, while an active investment would imply a higher level of involvement and potentially control over Root Ltd.

Tree Corporation Can Influence the Decisions of Root Ltd