BC1 This Basis for Conclusions summarises the International Accounting Standards Board's considerations in developing IFRS 10 Consolidated Financial Statements. Individual Board members gave greater weight to some factors than to others. Unless otherwise stated, any reference below to IAS 27 is to IAS 27 Consolidated and Separate Financial Statements, and to IAS 28 is to IAS 28 Investments in Associates.

BC2 The Board added a project on consolidation to its agenda to deal with divergence in practice in applying IAS 27 and SIC‑12 Consolidation - Special Purpose Entities. For example, entities varied in their application of the control concept:

(a) in circumstances in which an investor controls an investee but the investor has less than a majority of the voting rights of the investee (and voting rights are clearly the basis for control).

(b) in circumstances involving special purpose entities (to which the notion of 'economic substance' in SIC‑12 applied).

(c) in circumstances involving agency relationships.

(d) in circumstances involving protective rights.