minority interest

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Minority interest

An outside ownership interest in a subsidiary that is consolidated with the parent for financial reporting purposes.

Minority Interest

1. A percentage of ownership in a company that is significant but does not give the owner the ability to control the company. In accounting, one includes only the dividends from a minority interest on a balance sheet, unless the owner has enough ownership to exert influence (but not outright control) over the company's direction. In that case, one includes both dividends and ordinary income on the balance sheet.

2. A liability on a parent company's balance sheet indicating the amount of a subsidiary that the parent company does not own. For example, if a parent company owns 95% of a subsidiary and the remaining percentage is publicly traded, the dollar amount of that 5% is recorded as a liability on the balance sheet.

minority interest

1. In accounting, the ownership by the parent company of less than 100% of an affiliated firm.
2. A proportional ownership of a firm that is insufficient to constitute control. Generally, minority interest is viewed as ownership of less than 50% of the voting shares.

Minority interest.

All shareholders whose combined shares represent less than half of the total outstanding shares issued by a corporation have a minority interest in that corporation.

In fact, in many cases, the combined holdings of the minority shareholders are considerably less than half of the total shares.

In another example, in a partnership, any partner who has a smaller percentage than another partner is said to have a minority interest. Under normal circumstances, it is difficult for those with a minority interest to have any real influence on corporate policy.

minority interest

that part of a subsidiary company's listed SHARE CAPITAL which is not owned by the HOLDING COMPANY. Where the holding company owns more than 50% of the shares of a subsidiary company then it is able to control that company, but where it owns less than 100% of the shares then the minority interest of other shareholders in the subsidiary company must be recognized. In compiling CONSOLIDATED ACCOUNTS the claims of minority interests in certain group assets located in subsidiary companies must be recognized, and their entitlement to a share in the profits of subsidiary companies must be allowed for. See PREACQUISITION PROFITS.

minority interest

that part of a subsidiary company's issued SHARE CAPITAL that is not owned by the HOLDING COMPANY. Where the holding company owns more than 50% of the shares of a subsidiary company, then it is able to control that company, but where it owns less than 100% of the shares, then the minority interest of other shareholders in the subsidiary company must be recognized, in particular their entitlements to a share in the profits of subsidiary companies.
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