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Four investors A (10%), B (20%), C (30%), D (40%) — articles require majority voting for relevant activities. A, B and C have an informal but consistent voting practice (last few meetings). Do A, B and C jointly control the entity?
AYes — but only A controls because A is named first
BNo — only D has effective control because D is the single largest holder
CYes — A+B+C (60%) acting unanimously meet the majority threshold and have a demonstrated pattern of acting together, providing evidence of an implicit contractual arrangement under Ind AS 111
DNo — informal arrangements are never sufficient
Answer & Solution
Correct answer: C. Yes — A+B+C (60%) acting unanimously meet the majority threshold and have a demonstrated pattern of acting together, providing evidence of an implicit contractual arrangement under Ind AS 111
A, B and C together hold 60% (passing majority). The standard accepts a contractual arrangement evidenced by other than formal writing — and a demonstrated pattern of unanimous voting at recent meetings supplies evidence. Hence joint control by A, B and C.
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