Controlling interest
Encyclopedia
Controlling interest in a corporation means to have control of a large enough block of voting stock
shares in a company such that no one stock holder or coalition of stock holders can successfully oppose a motion. In theory this normally means that controlling interest would be 50% of the voting shares plus one.
In practice, though, controlling interest can be far less than that, as it is rare that 100% of a company's voting shareholders actively vote.
In addition, a company that requires a 2/3 super-majority of shares to vote in favor of a motion can grant, in effect, veto power to a minority shareholder or block of shareholders that own essentially 1/3 of the shares. Thus in some cases, a single entity can essentially maintain control, with only 33.4% of the outstanding shares. Ford Motor Company
's former 33.9% ownership of Mazda North American Operations
is an example of a controlling interest with minority shareholding that was granted by Mazda.
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
shares in a company such that no one stock holder or coalition of stock holders can successfully oppose a motion. In theory this normally means that controlling interest would be 50% of the voting shares plus one.
In practice, though, controlling interest can be far less than that, as it is rare that 100% of a company's voting shareholders actively vote.
In addition, a company that requires a 2/3 super-majority of shares to vote in favor of a motion can grant, in effect, veto power to a minority shareholder or block of shareholders that own essentially 1/3 of the shares. Thus in some cases, a single entity can essentially maintain control, with only 33.4% of the outstanding shares. Ford Motor Company
Ford Motor Company
Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...
's former 33.9% ownership of Mazda North American Operations
Mazda North American Operations
Mazda North American Operations is Mazda Motor Corporation's North American arm, and constitutes the largest component of that company outside Japan. The company has its headquarters in Irvine, California and is headed by James J...
is an example of a controlling interest with minority shareholding that was granted by Mazda.
See also
- Consolidation (business)Consolidation (business)Consolidation or amalgamation is the act of merging many things into one. In business, it often refers to the mergers and acquisitions of many smaller companies into much larger ones. In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group...
- Minority interestMinority interestMinority interest in business is an accounting concept that refers to the portion of a subsidiary corporation's stock that is not owned by the parent corporation...
- Holding companyHolding companyA holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
- Parent companyParent companyA parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed as a subsidiary of the parent company...
- SubsidiarySubsidiaryA subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...