Group Structure

teddy99

Hi Folks,

I was enquiring whether anyone may be able to assist with a financial group consolidation query.

If an owner called Jack Murphy owned A Limited Holding company.

The holding company owned X, y and Z Limited which were all part of the same group.

Jack Murphy also owned T Limited which is not part of the group structure.

However Jack owns two companies, can T limited be consolidated with the A Limited Holding Group?

HeinekenTicket

teddy99 wrote: »

can T limited be consolidated with the A Limited Holding Group?

No. Group = parent + subsidiaires. T is not a subsidiary of A because A does not control T.

However, T is related to A because they are under common control of Murphy. Related party disclosures may be required in the group accounts.

teddy99

HeinekenTicket wrote: »

No. Group = parent + subsidiaires. T is not a subsidiary of A because A does not control T.

However, T is related to A because they are under common control of Murphy. Related party disclosures may be required in the group accounts.

thanks Heinekenticket,

that what I though alrite.

However the boss guy wants the company T to be part of the group.
Is there any way of doing this apart from transfering the shares to A Limited the Holding company.

HeinekenTicket

teddy99 wrote: »

t
Is there any way of doing this apart from transfering the shares to A Limited the Holding company.

You'd have to demonstrate that A controls T (other than by holding a majority of the share voting rights). Depending on which finrep framework is applicable for your group accounts prep, have a look at the definitions of control in either FRS 2 or IAS 27 as to how this can be achieved.

dbran

Hi

It can if the companies are managed on a unified basis and to basically not consolidate the company would mean the consolidated accounts would not show a true and fair view. This was brought in post Enron where there were loads of off balance sheet vehicles to hide losses from being brought into the consolidation.

You would be looking at something like a supermarket and maybe the deli or butchers being companies not in the group although the departments are managed together with the other departments and are otherwise undistinguised. Under the accounting standards you would have to include it in the consolidation if to not do so would mean the accounts do not show a true and fair view. This ties into the overriding concept of substance over form.

Hope this helps


dbran

dbran

teddy99 wrote: »

thanks Heinekenticket,

that what I though alrite.

However the boss guy wants the company T to be part of the group.
Is there any way of doing this apart from transfering the shares to A Limited the Holding company.

Yes

Put a golden share arrangement in place whereby the holding company has a special share which controls the composition of the board of directors alone and has no other rights otherwise. This way under the companies Acts, the company is deemed to be a subsidiary but otherwise has no other tax implication as the members rights are otherwise unaffected re dividends winding up etc.

Kind Regards


dbran