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ABC Ltd. and XYZ Ltd. are each owned 25%-25%-25%-25% by B, C, D and E, with NO agreement among shareholders that they will vote together. Are ABC and XYZ under common control?
ANo — but only because the percentages are equal
BNo — without a contractual arrangement to act together, the shareholders are merely four individuals each holding equal stakes; no single 'party or parties' controls both entities, so common control does not exist
CYes — Appendix C only requires same shareholders, not joint action
DYes — same four shareholders own both companies
Answer & Solution
Correct answer: B. No — without a contractual arrangement to act together, the shareholders are merely four individuals each holding equal stakes; no single 'party or parties' controls both entities, so common control does not exist
Identity of shareholders alone does not establish common control. Without a contractual arrangement to vote collectively, no party (single or group) has the power to govern financial and operating policies of both entities. The combination would fall under Ind AS 103 mainline (acquisition method), not Appendix C.
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