Which of the following is not a reason for a parent to lose control of a subsidiary?
A) where the subsidiary issues additional shares to parties other than the parent
B) where the subsidiary issues bonus shares on a pro-rata basis
C) when the parent makes a decision to sell its controlling interest in the subsidiary to another party
D) where the subsidiary issues additional shares to parties other than the parent.

Question

Quizplus · Accepted Answer

Issuing bonus shares on a pro-rata basis does not affect the parent's control over the subsidiary, as each shareholder receives additional shares in proportion to their existing shareholding, without affecting the overall ownership structure. In contrast, issuing additional shares to parties other than the parent, or selling the controlling interest to another party, would dilute the parent's control.

Which of the Following Is Not a Reason for a Parent