Ownership Relations

The consolidation method and ownership, defined for each individual company within a particular consolidation type, determine how to consolidate and eliminate the company. You must have built a company structure for this consolidation type under Maintain/Company Structure/Define.

There are two ways of updating the information in the company structure for a certain consolidation type:

  • You enter the information manually for all companies on the Maintain/Company Structure/Consolidation Type - Define menu.
  • You can calculate it automatically using the information in the shareholdings register on the Maintain/Company Structure/Calculate Ownership Relations menu.
Note: For some complex multi cross ownership scenarios (a company/group that is linked to several groups), there might be multiple ways that the system can be configured but not all configurations options might be supported. For instance we do not support structural changes between years for cross-owned group, for example, a group that was cross-owned will no longer be cross-owned in the next year. Test any complex multi cross ownership scenarios in a non-production database before introducing to a production database. For instance, multi owned group owned by multi owned group is not supported.

You define which of the methods you want to use in the Maintain/Company Structure/Consolidation Type - Define menu.

If you use this function to calculate ownership for a Consolidation Type defined as Automatic, you must also have entered shareholding information in the investment register. You do this either under Group/Data Entry/Shareholdings and Investments in Group Companies or under Company/Data Entry - Reported Values. The votes percentage determines both if the company will be consolidated and which method that will be used.

Legal or Management Consolidation

The choice of general consolidation method for the consolidation type, that is, legal or management, is important for the calculation of the owned percentage, consolidation method, ownership and minority share. You can define this on the Maintain/Company/Consolidation Type - Define menu. For more information, see Consolidation Types.

Generally, if the legal method is used, acquisition elimination must be performed where the parent company and the subsidiary meet.

If the management method is used, the acquisition elimination is done for the shares in the group in which the parent company is, and for the equity in the group to which the subsidiary belong.

Legal and Sub-units

A fictive group consisting of a legal unit and sub-units is as a whole representing one legal company. The different units are handled in a more regulated way than other companies.

The fictive group has to be kept intact or, if not, the legal unit is not included in the company structure.

In an automatically generated management company structure, only the sub-units are included. They are given the same ownership relation as would have been calculated for the legal unit. Since the legal unit is not included, investment eliminations must be handled manually. Sub-units are used in the investment register with the result that eliminations are handled as for any company.

In a manually generated management company structure, the fictive group is kept intact. If one or more of the sub-units are connected to other groups, the legal unit has to be excluded from the company structure.

Note: Sub-units within a legal unit cannot own each other.