Minority Interest

Understanding Minority Interest 

Minority interest is the share of a company owned by investors who hold less than 50% of the total shares. These shareholders have limited control and influence over the company's decisions. In accounting, it represents the value of the shares held by these minority stakeholders, also known as non-controlling interest holders. 

A parent company must hold over 50% of the shares in its subsidiary to maintain its controlling position. 

Further Explanation of Minority Interest 

Minority interests are usually the shares of a company that are not owned by the parent company. This stake often ranges from 20% to 30% of ownership. While the parent company holds the voting rights, minority stakeholders have limited influence. 

Minority stakeholders may have specific rights, like participating in sales or accessing audit information. In private equity, minority stakeholders may negotiate for control rights. These could include a position on the board of directors. 

Companies disclose minority ownership on their balance sheets and report minority interest on the consolidated income statement as the share of profit for minority shareholders.