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Official Gazette

Saturday, October 21, 2017

Parent companies to be redefined

Updated: 15:40’ - 24/07/2014

The Ministry of Finance is expected to clearly redefine the term “parent company” when revising methods of making and presenting financial statements. Accordingly, an enterprise will be regarded as the parent company of another company if it holds the control right through dominating financial policies and operates to earn economic benefits from the latter’s operation, regardless of its legal form or name.

Specifically, a parent company is regarded as having the right to dominate financial policies and operation of another company if holding more than 50 percent of direct or indirect votes in the affiliate company and having the right to directly or indirectly appoint or relieve from office the majority of the latter’s board of directors and director (general director), cast majority votes in meetings of the board or equivalent level of management, revise the latter’s charter, and receive more than 50 percent of the votes from investors in the affiliate company.

In addition, the determination of parent company status will take into account the potential votes arising from the call option, debt instruments and capital instruments convertible into ordinary stocks.

VNL_KH1 

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