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Under Ind AS 110, an investor with decision-making rights over an investee may be acting as an AGENT (not controlling) when:
AThe investor delegates its decisions to a sub-fund manager
BThe investor exercises those rights primarily on behalf of, and for the benefit of, others — receiving remuneration without significant exposure to the investee's variable returns
CThe investor holds less than 50% voting rights in the investee
DThe investor is legally not the controlling shareholder of the investee
Answer & Solution
Correct answer: B. The investor exercises those rights primarily on behalf of, and for the benefit of, others — receiving remuneration without significant exposure to the investee's variable returns
Para B58 — a decision maker acting primarily on behalf of others (with remuneration commensurate with services and limited exposure to investee returns) is an AGENT and does NOT control the investee. The agent vs principal analysis weights four factors: (1) scope of decision authority, (2) rights held by others (especially removal rights), (3) magnitude/variability of remuneration, (4) exposure to variable returns from other interests in the investee.
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