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Group Statements - Coggle Diagram
Group Statements
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Investment in subsidiary
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We assume preference shares have NO voting rights, thus only ordinary shares can give you control
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Intergroup loans
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Loan will be incurred between holding company and subsidiary on the date of acquisition (on year end)
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Elements of control
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Ability to affect return
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Principal's decision making authority will influence returns, but an agent acts for the benefit of the principal and therefore does not control the investee
Power
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Extent of voting right is influenced by size, distribution of ownership and collaboration of other investors
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Rights includes the following:
- Voting right from share
-One issued share = one voting right, except if stipulated otherwise by the memorandum of incorporation
-Note the circumstances where in voting rights are exercisable
-Voting rights held as nominee are to be treated as held by that other person
-Voting right held in a fiduciary capacity is to be treated as held by the beneficiary
-Memorandum of incorporation can specifically exclude preference shareholders except where their rights will be affected by any suggestions
- Potential voting right
- Right to appoint / remove members of an investee's key management personnel
- Rights to appoint / remove another entity that directs the relevant activities
- Rights to direct the investee to enter into, or veto transactions for the benefit of the investor
- Other rights specified in a management contract
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