Non-Controlling Interest
Candlefocus EditorNCI also has an impact when a company makes an acquisition. If a company acquires another company and the acquiring company has more than 50% of the shares of the target company, then the non-controlling shareholders of the target company will receive a proportionate allocation of the pre-acquisition and post-acquisition amounts recorded in the equity of the acquired company. On the other hand, if the company making the acquisition has less than 50% of the shares, the non-controlling interest will only receive a proportionate allocation of the post-acquisition amounts.
In contrast to a non-controlling interest, a controlling interest refers to a situation whereby a shareholder has voting rights that give them control over the decision-making process at the company. This means that the shareholder can influence corporate decisions and make sure that their interests are heard.
Non-Controlling Interest can offer an additional layer of protection for those investors who are apprehensive about investing in a company due to the possibility of losing control over the decision-making process. Though NCI investors are unable to influence corporate decisions directly, they do have the power to influence decisions indirectly though silent persuasion.
Overall, Non-Controlling Interest is a type of ownership interest that offers minority shareholders a stake in the company without giving them control over corporate decision-making. This provides investors with the peace of mind that their investment is safe, even if the stock changes hands to different owners.