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Significant influence

. 'The power to participate in the financial and operating policy decisions of 

the investee but which is not control or joint control of those policies.'  

 (IAS 28, para. 3) 

 

As with control, significant influence can be determined by the holding of voting rights (usually attached 

to ordinary shares) in the entity. IAS 28 states that if an investor holds 20% or more of the voting power 

of the entity, it can be presumed that the investor has significant influence over the entity, unless it can 

be clearly shown that this is not the case. 

Significant influence can be presumed not to exist if the investor holds less than 20% of the voting 

power of the entity, unless it can be demonstrated otherwise.  

The existence of significant influence is usually evidenced in one or more of the following ways. 

(a) 

Representation on the board of directors (or equivalent) of the investee 

(b) 

Participation in the policy making process 

(c)