What is Non-Controlling Interest (NCI)?
Non-controlling interest, formerly called minority interest, is the share of a subsidiary’s equity that is not owned by the parent. It is presented within consolidated equity in the consolidated balance sheet and as a separate allocation of consolidated profit in the income statement.
How It Works
- At acquisition, measure NCI at fair value or at its share of net identifiable assets.
- Each period, allocate the NCI’s share of subsidiary profit to NCI.
- Adjust NCI for dividends paid to non-controlling shareholders.
- Disclose NCI’s share of equity and profit separately.
Saudi Context
Saudi conglomerates frequently own 51 to 75 percent of subsidiaries and report meaningful NCI balances; Capital Market Authority disclosure requires clear segregation in consolidated statements.
Example
Parent owns 80 percent of a subsidiary that earns SAR 100 million. SAR 20 million is allocated to non-controlling interest in the consolidated income statement.