X Ltd and Y Ltd decide to establish a new entity, Z Ltd. The purpose of Z Ltd is to develop and market a new car seat designed for use by babies when travelling in a car. X Ltd and Y Ltd have specific roles in the new company and have unilateral ability to make all decisions in relation to their specified roles. X Ltd has agreed that it will be responsible for developing the new car seat and obtaining all the approvals from the relevant safety bodies in Australia. Once the seat has been designed and all safety approvals have been received, Y Ltd will manufacture and market the product.

Required

Discuss the activities undertaken by X Ltd and Y Ltd in relation to the determination of which entity controls Z Ltd.

This is from Financial accounting (20073)