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Topic : Essentials for Corporate law
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Business and Law

 
Industry : Law
Functional Area : Getting Started
Activity: Question posted: 05 26 2008 00:28:34 +0000, 2 answers, 399 views, last activity 08 12 2011 07:05:12 +0000
 
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  Answered by     Rajesh Tekale, Counsel, Advocate on Record , High Court, Mumbai  | 08 12 2011 07:05:11 +0000
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You get 20% ownership rights, rule is you can become director and decision maker in the company.

  Answer modified by     santosh lakshmi vempaty, Lawyer/Attorney, CrownBridge Group LLC  | 05 25 2010 05:16:58 +0000
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Ownership also implies the influence in global or strategic decisions. When a company purchases 20% or less of the outstanding common stock, the purchasing company’s influence over the acquired company is not significant. The purchasing company uses the cost method to account for this type of investment. Under the cost method the investment is recorded at cost at the time of purchase. In such cases what happens is that companies do not have the ability to significantly influence the operations of the investee as they are accounted for using the cost method of accounting.

 
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