An entity (investee) over which an investor can exercise significant influence (but not control, as is the case with a subsidiary). Generally, significant influence exists or is presumed to exist when an investor holds, directly or indirectly through subsidiaries, 20 per cent or more of the voting power of that entity (i.e., the investee). Voting rights arise from ordinary share holdings as well as other types of holdings (e.g., preferred share holdings). Other types also include loans, advances, debt securities, trade receivables, and options exercisable to ordinary shares.
Indicators of significant influence include material transactions (between the investor and investee), provision of essential technical information/ assistance, representation (of the investor) on the board of directors or equivalent governing body of the investee, and a significant ownership by the investor relative to other shareholdings (that is, a zero or very limited concentration of other shareholders), among others.
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