Controlling Interest

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Definition: Controlling Interest

A controlling interest is an ownership interest of outstanding corporate stock such that the sufficient voting shares will prevail in any shareholders’ motion. A majority of voting shares(51% or more) ownership is definitely a controlling interest giving the owner legal control of the firm. The controlling interest owner can enact changes at the highest level, and override other shareholder opinions/votes.

Controlling interest is also known as the majority shareholding stake or controlling influence. The controlling interest can be owned as an individual, family, consortium of investors, or organizational entity. In a publicly traded company, fifty percent plus one ownership of the stock is a controlling interest. Alternatively, it can be defined as ownership of a sufficient number of voting stock in a company, so as to effectively control company policy. Controlling interest implies control over policy and management, and control over firm direction.

Generally the controlling interest figure is fifty percent of outstanding or voting shares, plus one. Controlling interest can be achieved with less than 50% stock ownership as well, provided the ownership stock is proportionally significant compared to other total voting stocks. A party/individual with less than a majority of voting shares shall be examined for other present circumstances vis-a-vis the remaining shareholders to determine if the party is considered to hold a controlling interest.

Controlling interest into equity securities refer to long term stock investment where stockholder owns at least 51% of the corporation.

For a partnership, association, or any other entity (such as a trust), the controlling interest can be defined as fifty percent or more of the capital, profits, or beneficial interest.

Implications of Controlling interest

• Commands the majority vote, along with veto powers holding sway over strategic firm decisions

• Total control of company operations, including election of its board of directors.

• Generally a person with a controlling interest tends to be the firm’s founder.

• Minority shareholders will find it difficult to outvote the majority shareholder with the controlling interest.

Advantages of having a controlling stake

• Guarantees the majority shareholder a greater share in distribution of benefits such as dividends, share splits, retained earnings, etc.

• Leverage – provides the majority shareholder or entity leverage to increase their stakes during mergers, acquisitions, strategic mergers with share swaps, etc. Thus the owner of controlling interest can exercise a tight grip over business ownership structure.

• Board Positions: A Controlling interest implies a guaranteed membership to the board of directors. Generally such a person takes up the chairmanship of the board, or they second the election of individuals to chair the board.



A shareholder with controlling influence may have stock ownership percentage above 50% without additional control or power. Additional ownership beyond 51% is beneficial only for dividend distributions. For instance a 80% shareholder can collect 24% more dividends than a 58% shareholder.


Hence, this concludes the definition of Controlling Interest along with its overview.


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