Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Soya Bean Inc. (SBI) is a Canadian public company that owns several soya bean farms across North America. Factory Foods Inc. (FFI) is a Canadian

Soya Bean Inc. (SBI) is a Canadian public company that owns several soya bean farms across North America. Factory Foods Inc. (FFI) is a Canadian public company that, among other things, manufactures and sells several types of food products made from soy beans. Since FFI was established, SBI has owned 42% of the voting common shares of FFI. The other 58% of the voting common shares are held as follows:

  • 12% by a group of shareholders lead by Mr. Water who is often very vocal at shareholders' meetings and is not afraid to challenge SBI.'s suggestions.
  • 46% held widely by thousands of unrelated shareholders, each owning a very small percentage of the shares.

SBI and FFI recently signed a contract whereby FFI has to buy all of SBI's harvest of soya beans for the next 5 years. The price that FFI has to pay for the soya beans is fixed per the contract for the next 5 years. The contract further specifies that FFI is only allowed to buy soy beans from other suppliers if SBI cannot supply enough soya beans to fulfill FFI's needs. Soya beans from SBI is estimated to amount to about 95% of all of FFI's soya bean purchases.

Required:

Discuss whether FFI is a subsidiary of Soya Bean Inc.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Financial Management

Authors: James Van Horne, John Wachowicz

13th Revised Edition

978-0273713630, 273713639

More Books

Students also viewed these Finance questions