Options LO2 Hewey Ltd, Dewey Ltd and Louie Ltd each own one-third of the ordinary shares
Question:
Options LO2 Hewey Ltd, Dewey Ltd and Louie Ltd each own one-third of the ordinary shares that carry voting rights at a general meeting of shareholders of Woodchuck Ltd. Hewey Ltd, Dewey Ltd and Louie Ltd each have the right to appoint two directors to the board of Woodchuck Ltd. Hewey Ltd also owns call options that are exercisable at a fixed price at any time and, if exercised, would increase Hewey Ltd’s voting rights in Woodchuck Ltd to 60%, while Dewey Ltd’s and Louie Ltd’s would become 20% each. The management of Hewey Ltd does not intend to exercise the call options. Required Discuss whether Woodchuck Ltd is a subsidiary of any of the other entities.
Step by Step Answer:
Financial Reporting
ISBN: 978-0730363361
2nd Edition
Authors: Janice Loftus ,Ken Leo ,Sorin Daniliuc ,Belinda Luke ,Hong Nee Ang ,Karyn Byrnes