A company may own more than 50 per cent of the capital of another entity and not have effective control of that entity as defined in AASB 3:

Question

Quizplus · Accepted Answer

AASB 3 defines effective control as the ability to direct the relevant activities of an entity in order to generate returns. Therefore, simply owning more than 50% of the capital may not necessarily give a company effective control of another entity. Other factors, such as contractual arrangements or the presence of other significant shareholders, may impact the degree of control.

A Company May Own More Than 50 Per Cent of the Capital