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Consolidation of Subsidiary by Golden Share

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  • 23-03-2011 8:02pm
    #1
    gaddrep2
    Registered Users Posts: 6 ✭


    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?
    Tagged:


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    #2
    dbran
    Registered Users Posts: 2,094 ✭✭✭dbran


    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


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    #3
    gaddrep2
    Registered Users Posts: 6 ✭gaddrep2


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


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    #4
    ants09
    Registered Users Posts: 709 ✭✭✭ants09


    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.


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    #5
    dbran
    Registered Users Posts: 2,094 ✭✭✭dbran


    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


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    #6
    gaddrep2
    Registered Users Posts: 6 ✭gaddrep2


    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.


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  • Options
    #7
    dbran
    Registered Users Posts: 2,094 ✭✭✭dbran


    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....


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