Consolidation of Subsidiary by Golden Share

gaddrep2 · 23-03-2011 7:02pm #1

Hi,

Anyone know if you should / have to consolidate a subsidiary that is only a subsidiary by golden share?

I know that a golden share makes a sub under FRS 2 / Co. Acts but under the equity method in FRS there isn't any equity share of net assets to include on consolidation?

dbran · 24-03-2011 10:46am

Hi

You would have to consolidate as the company is controlled by the holding company. Even though in terms of equity the golden share is only a small proportion of the share capital it is control that is the overriding issue. So 100% of the assets must be included in the consolidation.

Kind Regards

dbran

gaddrep2 · 24-03-2011 2:03pm

Thanks dbran. Is there any out to avoid consolidating a golden group, that I could technically stand over?

ants09 · 24-03-2011 2:29pm

gaddrep2 wrote: »

Thanks dbran. Is there any out to avoid consolidating a golden group, that I could technically stand over?

Exclusions of a subsidary from consolidation

- with effect from April 2009 if a subsidary satisfies the definition of a Asset held for resale

- on the basis that IFRS, IAS's and FRS only apply to material matters, it may be argue that a subsidary can be excluded on the grounds of immaterialy.

dbran · 24-03-2011 2:47pm

Hi

As Ant mentioned some possible ways to exclude it from consolidation. Another is if to include it would incur unreasonable costs far and above the benefit of inclusion in consolidation.

Presumably is is a large company group and not exempt from consolidation anyway? Also I assume it is material as otherwise you would not be asking the question.

Kind Regards

Dbran

gaddrep2 · 25-03-2011 2:17pm

Thanks.

No if the golden share creates a group it breaches the consolidation threshold alright. However the shares were really only put in place to avoid s. 31 breaches and allow some funds to move between companies. Consolidation wasn't the motive.

dbran · 25-03-2011 3:11pm

gaddrep2 wrote: »

Thanks.

No if the golden share creates a group it breaches the consolidation threshold alright. However the shares were really only put in place to avoid s. 31 breaches and allow some funds to move between companies. Consolidation wasn't the motive.

But it is the unfortunate byproduct....

Consolidation of Subsidiary by Golden Share

Comments