Which of the following can result in a loss of control by a parent over a subsidiary?
I. The parent sells some of the shares in the subsidiary.
II. There is a change in the dispersion in the holding of shares by entities comprising the NCI.
III. There may be a change in a contractual arrangement.

Question

Quizplus · Accepted Answer

Any of the three options listed can result in a loss of control by a parent over a subsidiary. If the parent sells some of the shares in the subsidiary, their ownership percentage will decrease and they may no longer have control. If there is a change in the dispersion in the holding of shares by entities comprising the NCI, the parent's ownership percentage may also decrease, leading to a loss of control. Additionally, if there is a change in a contractual arrangement, such as a change in voting rights, this can also lead to a loss of control by the parent. Therefore, all three options can result in a loss of control and the correct answer is A.

Which of the Following Can Result in a Loss of Control