What is the difference between Ownership and Control for consolidation?

[Former Member]

What is the difference between Ownership and Control for consolidation?

[Former Member · Accepted solution]

Hi Kimi,

Usually, the ownership defines how much stake do you have in another company. The control signifies how much controlability do you have in another company. Logically speaking, these 2 things might appear similar. However, in reality, they might be different. You might 20% stake in another company, but you might not have any control in the management or board decisions of that company.

Hope you got the idea.

[Former Member]

Nilanjan,

"You might 20% stake in another company, but you might not have any control in the management or board decisions of that company" So how is the control over another company decided?

IF company A has 50% ownership in Company B,

• is it possible that they do not have any control at all?
• is it possible that they have 60% control??

I am still not sure about what is meant by control.

[Former Member]

Hi Kimi,

There are a lot of governing hands in deciding the percentage of control, and doesnt depend on only the percentage of the share. I might buy 5% percent share in a company, but this doesnt mean that I have 5% influence on the decisions made by the management.

In lot of cases, when 2 companies get into engagements, they will have clear contract stating the share percentage, control percentages, etc.

Hope this helps.

[Former Member]

Thank you Nilanjan and Hengye. Your answers are helpful

[former_member196060]

Hi Kimi,

Sorry for the confusion that here you mean the control in Ownership calculation.

Nilanjan has explained the issue clearly, here I would add on think from technical point of view that if you use calculation function for method decision, it will check the PCTRL which means the value of control maintained.

Regards,

Hengye