Case Study 15

Determining parent status

Chip Ltd has 37% of the voting interest in Dale Ltd. An investment bank with which

Chip has business relationships holds a 15% voting interest. Because of the closeness of

the business relationship with the bank, Chip Ltd believes it can rely on the bank's

support to ensure it cannot be outvoted at general meetings of Dale Ltd.

Required

Given that there is no guarantee that the bank will always support Chip Ltd,

particularly if there is a potential for economic loss, discuss whether Chip Ltd is a

parent of Dale Ltd.