AS-18

Dear Mam, 

Let me share my understanding with you & then you can decide –

Para 3 (e) – “Indirectly”

The word “indirectly” seems to cover “beneficial ownership” along with “nominal ownership”. I:e when shares are held in the interest of any person by some other person then such shares will also be considered to check the RP status of the former (i:e in whose interest shares are held).

But this “beneficial ownership” has limited role to play i:e only in the case where a disclosure is made by the person in question that so much shares are held in his interest by other people.

Now next question arises – where shares are held in the beneficial interest of some other person then those shares will be included to determine the RP status of both “beneficial owner” as well as “nominal owner”, or it will only be considered to determine the status of “beneficial owner”

I think it will be considered only once to determine the status of “beneficial owner”

Para 3(e)

Enterprises over which any person described in (c) or (d) is able to exercise “significant influence”. This includes enterprises owned by directors or major shareholders of the reporting enterprise and enterprises that have a member of key management in common with the reporting enterprise.

Significant influence - participation in the financial and/or operating policy decisions of an enterprise, but not control of those policies.

Attention is invited on the fact that to have “Significant influence”, the degree of ownership is not relevant but Para 13 of AS-18 reads as follows (in abstract)–

As regards share ownership, if an investing party holds, directly or indirectly through intermediaries, 20 per cent or more of the voting power of the enterprise, it is presumed that the investing party does have significant influence, unless it can be clearly demonstrated that this is not the case.

ASI- 19 - In the context of ‘control’ and exercise of ‘significant influence’, the meaning of the term ‘intermediaries’ should be confined to mean only enterprises which are ‘subsidiaries’ within the meaning of AS 21, and extending it to cover ‘associate’ etc. would not be practicable.

Coming back to your question –

Shares held by relatives (even in the beneficial interest) cannot be considered for the purpose of “significant influence” since “relatives” are not covered within the meaning of “intermediaries”.  

Pls appreciate the words "through intermediaries" are missing in para 3 (c) & hence this interpretation cannot be extented to para 3 (c)

Just wanna add -

I always fail to understand one thing -

Pls note that Para 3(e) seems to cover those enterprises over which specified individuals exercises "significant influence", but having "control"  is something, which is in excess of having "significant influence" and in that case those enterprise over which specified individual have "control" should also be considered as RP of the reporting enterprise.

Now the definitions of “Control” & Significant influence” are so strange that there can be a possibility of one having “control” but not “significant influence” over an enterprise.

So whether it will be treated as RP under Para 3(e) or not??