BC42 ED 10 proposed that in order to control an investee, an investor must have the power to direct the activities of that investee. IAS 27 defines control as the power to govern the financial and operating policies of an entity. The Board decided to change the definition of control because even though power is often obtained by governing the strategic operating and financing policies of an investee, that is only one of the ways in which power to direct the activities of an investee can be achieved. An investor can have the power to direct the activities of an investee through decision‑making rights that relate to particular activities of an investee. Indeed, referring to the power to govern the financial and operating policies of an investee would not necessarily apply to investees that are not directed through voting or similar rights.

BC43 Respondents to ED 10 did not object to changing the definition of control to power to direct the activities of an investee. Many were confused, however, about what the Board meant by 'power to direct' and which 'activities' the Board had in mind. They asked for a clear articulation of the principle behind the term 'power to direct'. They also expressed the view that power should relate to significant activities of an investee, and not those activities that have little effect on the investee's returns.