Banana Berhad owns 45% of the voting shares in Orange Berhad. Orange has four other investors which own the remaining 55% of its voting shares and are all technology companies. The largest of these holdings is 18%. Orange is a property developer and builds both residential and commercial properties. Banana has no expertise in this area and is not involved in the renovation or disposal of the property. The board of directors of Orange makes all of the major decisions but Banana can nominate up to four of the eight board members. Each of the remaining four board members is nominated by each of the other investors. Any major decisions require all board members to vote and for there to be a clear majority. Thus, Banana has effectively the power of veto on any major decision. There is no shareholder agreement as to how Orange should be operated or who will make the operating decisions for Orange. The directors of Banana believe that Banana has joint control over Orange because it is the major shareholder and holds the power of veto over major decisions.

Required: Explain whether Banana Berhad has joint control over Orange Berhad. 

Answer rating: 100% (QA)

a If an entity holds 20 or more of the voting power of the investee it is presumed that the entity has significant influence unless it can be clearly ... View the full answer