BC93 IAS 27 and SIC‑12 do not include guidance on rights that give an investor power, other than voting rights and potential voting rights. In addition, neither discusses the effect that such rights held by other parties have on the rights of an investor.

BC94 The Board addressed this issue to some extent in ED 10 by including guidance on protective rights. However, comments from respondents to ED 10 suggested that the guidance was not sufficient.

BC95 The Board decided to address the insufficiency by providing additional guidance about the activities that an investor must be able to direct in order to have power (ie those activities that significantly affect the investee's returns) and by providing guidance on when those rights are substantive. The Board believes that including such guidance should help an investor to determine whether it controls an investee, or whether the rights held by other parties are sufficient to prevent an investor from controlling an investee.

Voting rights

BC96 As with IAS 27 and ED 10, the Board decided to include guidance in IFRS 10 that addresses the assessment of control of investees that are controlled by voting rights.

Majority of voting rights