Answer to Question #167357 in Management for Wilfred Mwinso

Question

the THREE (3) major shareholders of Aluworks PLC and the proportion of their shareholdings. Identify whether those shareholders have control or significant influence on Aluworks and whether Aluworks was right in presenting separate financial statements. Do you see any issues bordering on consolidation?

Answer 1

Major shareholders of Aluworks PLC have the biggest proportion of the shareholding. Those have a controlling interest. This is when a shareholder, or a group acting in kind, holds a majority of a company's voting stock, giving it significant influence over any corporate actions. Shareholders that have a controlling interest often are able to direct the course of a company and make most strategic and operational decisions. The individuals own at least 50% of the outstanding shares of Aluworks PLC plus one.

Controlling interest gives the group of shareholders significant influence over the actions of a company. A party can achieve controlling interest as long as the ownership stake in a company is proportionately substantial relative to total voting stock. A controlling interest grants an investor the leverage to increase their shareholding stake in a company in the event of a merger or acquisition. For example, in a strategic merger that involves a share swap, the investor who holds controlling interest would structure a deal that continues to give them majority voting power over the new entity. There are issues bordering on consolidation because it involve so many complex procedures that are hard to achieve.