![]() Prior to spin-off of a subsidiary by a parent entity, another wholly owned subsidiary transfers net assets to the “SpinCo.”.Two companies under common control combine to form an LLC.A UK-domiciled company transfers assets to a subsidiary domiciled in a different jurisdiction.A reporting entity charters a newly formed entity to effect a transaction.If your organization is contemplating any of the following, we recommend an early assessment of the implications: Some examples of common control transactionsĬommon control transactions arise in a range of circumstances. Determining whether common control exists requires judgment and could have broad implications for financial reporting, deals and tax. Entities that are consolidated by the same parent-or that would be consolidated, if consolidated financial statements were required to be prepared by the parent or controlling party-are considered to be under common control. “Control” can be established through a majority voting interest, as well as variable interests and contractual arrangements. Appreciating the potential complexities will help companies understand impacts to financial reporting.Ī common control transaction is a transfer of assets or an exchange of equity interests among entities under the same parent’s control. ![]() Restructuring within a common control group can create tax and accounting complexities and require multiple judgments.Spurred by Brexit, tax reform, and other regulatory changes, many entities are considering organizational changes to prepare for-or respond to-shifting market dynamics.
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