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ABC Ltd. is 50:50 between AB and BC. AB appoints 3 directors and BC appoints 2 (board of 5); decisions need simple board majority. Is ABC Ltd. jointly controlled?
ANo, because there are odd-numbered directors
BNo — AB's 3 directors alone can pass any decision; the equal shareholding is irrelevant because voting at shareholder level doesn't drive the relevant activities (the board does)
CYes — 50:50 shareholding implies joint control
DYes, because both sides have at least 1 director
Answer & Solution
Correct answer: B. No — AB's 3 directors alone can pass any decision; the equal shareholding is irrelevant because voting at shareholder level doesn't drive the relevant activities (the board does)
Decisions are taken by board majority. AB's 3 directors can pass any decision without BC's directors agreeing. Hence AB unilaterally controls ABC; equal shareholding does not translate into joint control because the relevant decisions live at the board. Ind AS 111 illustration 8.
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