blisher that has purposely refrained from using

high-technology equipment over the past five years as the directors (the L family)

considered it to be a fad and a waste of the companys resources. As a result, the

companys antiquated equipment has failed to produce quality material and has been

very inefficient compared with ZYXs competitors. During the current year, the

companys bankers took possession of the companys assets, converted all the debt

into equity and two directors of the bank were appointed to ZYXs board, which now

totals four people. The bank is undecided on whether it should sell the companys

assets, which have little recoverable value, or inject further equity into the company,

purchase more advanced equipment and attempt to trade on and sell the business as

a going concern.

c) M Ltd is a 30 per cent shareholder of Investment Co. Pty Ltd. The other shareholders

have smaller shareholdings (around 8 to 12 per cent) and are always too busy to

attend annual general meetings. M Ltd has two non-executive seats on the board and

the remaining three are held by other shareholdersone chief executive officer who

is a shareholder and two non-executiveswho do make an attempt to attend board

meetings.

d) S Ltd is owned 50 per cent by B1 Ltd and 50 per cent by B2 Ltd (the founding

shareholders). Each has two seats on the board, with no party having a casting vote,

although B1 Ltd appoints the managing director. Profits are split 5050 after the

provision of the managing directors salary. B2 Ltd has agreed that it will pay a

management fee to B1 Ltd, equivalent to 50 per cent of the results for the year. B1

Ltd is the holder of 10 options, which are exercisable at any time at a 10 per cent

discount to the fair value of the shares as at the exercise date.

e) B Ltd is a 51 per cent shareholder in C Ltd and currently has two out of five board

seats. R Ltd is the remaining 49 per cent shareholder and currently has the other

three seats. B Ltd is a passive shareholder as it is happy with the way R Ltd has been

running the company.

f) J Ltd, P Ltd and G Ltd are each 33.3 per cent shareholders of GH Pty Ltd, a small

proprietary company that is involved in the music industry. J Ltd and G Ltd are

passive shareholders with one board seat each out of a total of three. P Ltd has one

board seat and is also involved in the day-to-day running of the business.

REQUIRED

For each of the above independent situations, determine whether or not control exists

and, if so, by which party (pursuant to AASB 10).