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IAS 28 The effects of rights of veto on control

Date recorded:


The IFRIC discussed an issue relating to the effect of rights of veto given to a third party on the assessment of whether an owner of more than half of the voting rights in an enterprise has control.


Decision not to add

August 2002



The IFRIC agreed not to add this issue to its agenda, because the Board is expected to address this issue in the near future as part of its project on Consolidation and Special Purpose Entities.

At the February 2004 meeting, the Board tentatively agreed that holders of veto rights may negate apparent power even if

• those rights are limited to the ability to block actions if:

• those veto rights relate to operating and financing policies; and

• those veto rights relate to decisions in the ordinary course of business and not

• only to fundamental changes in the organisation (such as disposal of business units or acquisition of significant assets).

The Board will continue to discuss this issue as part of the Consolidation and Special Purpose Entities project.

IFRIC reference: IAS 28

Correction list for hyphenation

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