Minority interest

This is an accounting term for the amount of a balance sheet not owned by a firm’s shareholders. This arises because of the way two companies’ balance sheets are combined when one buys the other, following UK rules. Say, for example, A plc buys 75% of B plc. A now controls B as it has a majority of the voting shares.

In a ‘consolidated’ balance sheet, you combine 100% of the assets A now controls – so all of A plc and B plc. But in the bottom of the balance sheet, in the shareholders’ funds section, you show what is owned by A plc. This means 25% of the net asset value of B plc is shown as a “minority interest” as it is technically owned by outside shareholders.

For example, if A and B have assets of £100m each, the combined balance sheet will show £200m of net assets. However, the shareholders’ funds section will show the same £200m total but with a line ‘minority interests’ showing the 25% of B – £200m x 0.25, or £50m – not owned by A.

MoneyWeek magazine

Latest issue:

Magazine cover
Going bust

What happens when countries default?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Vote in the MoneyWeek Readers' Choice Awards

Vote for your favourite financial services companies in the inaugural MoneyWeek Awards, and you could win a year's subscription to MoneyWeek magazine. Find out more and vote here.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.