Parties without joint control

Learning objectives

• Distinguish a party that has joint control from a party that participates in the joint arrangement without having joint control.L1, L2

Normative references

• IFRS 11Appendix A definitions: a joint arrangement is an arrangement of which two or more parties have joint control; joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control; a joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets, and obligations for the liabilities, relating to the arrangement; a joint venture is a joint arrangement whereby those parties have rights to the net assets; the joint operator and the joint venturer are the parties that have joint control of the joint operation and of the joint venture respectively; a party to a joint arrangement is an entity that participates in it, regardless of whether it has joint control; a separate vehicle is a separately identifiable financial structure, including separate legal entities or entities recognised by statute, regardless of whether they have a legal personality.
• IFRS 11 §8A party to an arrangement first assesses whether the contractual arrangement gives all the parties, or a group of the parties, control of the arrangement collectively, i.e. whether they must act together to direct the activities that significantly affect the returns of the arrangement (relevant activities). Joint control then exists only if decisions about those activities require the unanimous consent of the parties that collectively control (para. 9); the assessment of collective control is based on the definition of control in IFRS 10 (B5).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• All the parties to a joint arrangement are joint operators or joint venturers, including those whose consent is not required for decisions about the relevant activities.L1
• A colleague writes: "Zéphyr SA holds 10% of a joint venture whose decisions about the relevant activities require the agreement of the two other parties, but not its own (case data); Zéphyr is therefore a joint venturer on the same footing as they are." What is the error in this reasoning?L2