What is the condition of Group Company
When we say a Company is group company of other
1 Replies
Pawan Kr. Tomar
(CA)
(169 Points)
Replied 30 November 2010
1. Group is a parent and all its subsidiaries
2. Parent is an entity that has one or more subsidiaries
3. A subsidiary is an entity, including unincorporated entity like partnership firm etc that is controlled by another entity as known as the parent.
4. Control is the power to govern the financial and operating policies of an entity to get benefits
5. Control is of four type:
a. Direct Control : Acquire more than 50% voting rights
b. Control by dominant influence: 1. Power over more than 50% of voting rights
2. Power to appoint or remove majority of members of BOD or other equivalent governing body
3. Power to control by virtue of an agreement or statute
4. Power to cast majority of votes at the meeting of BOD
c. Control due to potential voting rights: only if potential voting rights are currently exercisable or convertible, they are considered for assessing the control. If they are exercisable or convertible at future date they will not considered.
d. Indirect Control: If one subsidiary is a parent of another entity then such another entity also will be the subsidiary of the parent of subsidiary.
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