A Comprehensive Guide to Minority Interests in Consolidated Subsidiaries
Definition & Meaning
Minority interests in consolidated subsidiaries refer to the ownership stakes held by shareholders who do not have a controlling interest in a subsidiary company that is included in a parent company's financial statements. These interests represent the equity capital accounts of the subsidiaries that have been consolidated for regulatory capital calculations. However, any minority interests that do not provide significant capital support are excluded from this definition.
Legal Use & context
This term is commonly used in the context of corporate finance and accounting, particularly in regulations governing banks and financial institutions. Understanding minority interests is essential for compliance with capital maintenance requirements set forth by regulatory bodies, such as the Federal Deposit Insurance Corporation (FDIC). Users may encounter forms related to financial disclosures or capital calculations that involve minority interests, which can often be managed using templates available from US Legal Forms.
Real-world examples
Here are a couple of examples of abatement:
For instance, if a parent company owns 70% of a subsidiary, the remaining 30% represents minority interests. These minority interests would be included in the parent company's consolidated financial statements. Conversely, if a subsidiary has a minority interest that does not contribute to its capital structure, such as a nominal investment, it may be excluded from regulatory capital calculations.