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ABC Ltd. and XYZ Ltd. are each owned 25%-25%-25%-25% by B, C, D and E. B, C and D have entered a shareholders' agreement that gives them joint control over both ABC and XYZ. Are ABC and XYZ under common control under Appendix C of Ind AS 103?
ANo — control by a 'group of individuals' is not recognised by Ind AS 103
BYes — but only if B, C and D are related parties
CNo — common control requires a single corporate parent
DYes — a group of individuals acting under a contractual arrangement constitutes a controlling 'party or parties'; common control exists
Answer & Solution
Correct answer: D. Yes — a group of individuals acting under a contractual arrangement constitutes a controlling 'party or parties'; common control exists
Appendix C explicitly recognises control by individuals or a group of individuals acting together under a contractual arrangement. The contractual joint control by B, C and D over both entities establishes common control, regardless of whether the controlling individuals themselves have Ind AS reporting obligations.
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