Minority interest
This is an accounting term for the amount of a balance sheet not owned by a firm’s shareholders.
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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Millions of over 50s fear pension investment risk – how should you position your portfolio?
To de-risk or not to de-risk, that is the question. Act too late and you could face irreversible losses. Move too early and miss out on significant gains that could transform your retirement.
-
£150 off energy bills: millions more to get discount this winter
The expansion of the Warm Home Discount scheme follows a government U-turn on the Winter Fuel Payment. We explain who will get the £150 discount