Minority Interest

Minority interest refers to the ownership stake held by shareholders who own less than 50% of a company’s total shares or voting rights. Because they do not have a majority, these shareholders have limited control over corporate decisions.

Key Characteristics: Represents the portion of a subsidiary not owned by the parent company in consolidated financial statements. Also called non-controlling interest, highlighting the lack of majority control. Reflects the equity interest of minority shareholders in the net assets of a subsidiary. Important for consolidation purposes, as it ensures that the financial statements fairly represent ownership distribution.

Example: Company A owns 80% of Company B, while the remaining 20% is held by other investors. The 20% stake represents the minority interest. In consolidated financial statements, profits attributable to minority interest are shown separately from the parent company’s share