Techniq has been offered 40% of the ordinary share capital of Batteries Ltd (Batteries), a supplier of one of the electric battery component parts for the 'Two'. As part of the negotiations, the management of Batteries would continue to have responsibility for the day to day running of Batteries.

Additional information for potential investment 1

• The remaining 60% of the ordinary share capital would be spread amongst 8 institutional investors.
• Historically, an average of six of these investors have attended the Annual General Meeting (AGM) of Batteries.
• In about three quarters of past AGM decisions, these investors have voted together. However, one of these investors also holds a 5% investment in Techniq and they have indicated that going forward they would vote with Techniq.
• Techniq would be entitled to appoint 4 out of the 9 directors. Techniq plan on one of these appointments being a specialist in electric batteries. This knowledge would enable Batteries to significantly improve their technical knowledge, resulting in batteries that can run a greater distance without needing to be recharged.
• As part of the agreement all major investing and financing activities of Batteries can be made unilaterally by Techniq. However, the remaining investors would retain a power of veto over any investing decisions that would result in the gearing ratio (defined as debt / [debt + equity]) exceeding 40%.
• One of the investors also supplies Batteries with replacement non-current assets, normally every 5 years. As part of the agreement, this arrangement would continue.

Is the acquisition likely to lead to control by Techniq? Explain financial reporting treatment please and any assumptions you make and give an assessment of any further info required to determine if control exists or not