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Definition

This is a significant shareholding (usually above 5%) which does not allow the shareholder to control the company but which affords him/her influence and often a position on the board of directors. A holding of above 50% gives the shareholder control over the appointment of board members and such a stake must be consolidated into their group accounts. A lesser stake of between 20% and 50% may give the holder effective control, especially if they are the largest single shareholder, but from an accounting perspective is regarded as an associate company and may be equity accounted. Anything less than 20% is regarded as an investment and shown as an asset on the balance sheet.

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