Ownership structure register
Introduction¶
The ownership structure register describes the history of the shareholding relationships between companies forming part of a group. In particular, in a given relationship, the register specifies not only the parent entity (owner) and child entity (owned entity), but also detailed financial information. For this information to be available and accessible at all times, it is necessary to track all events that change relationships between group entities. In particular, it is necessary to record the following variations, called financial investment events:
- shares acquired from minorities
- shares sold to minorities
- capital increases
- changes to shareholdings
Relationship Type between owned entity and owner entity¶
The possible relationships between an owned entity and an owner entity can be expressed as follows:
| Element | Description |
|---|---|
| By entity | Entity/entity relationship |
| By entity - custom dimension 2 | Entity/custom dimension 2 relationship |
The shareholding relationship type is defined in the advanced rules for journals associated with the process for which the ownership structure register is managed. You can use the generic rules or override them for individual processes.
IMPORTANT: if using processes with "By entity" or "By entity/Custom dimension 2" relationship types, you should use at least two different event scenarios, one per process type. If the same event scenario can be used for processes with different relationship types, the ownership structure register can only be managed if the user is authorised on the entity's default custom dimension.
Ownership structure register management types¶
Management of the ownership structure register is not mandatory in CCH Tagetik. The following options are available:
| Management type | Description |
|---|---|
| Full management | - Automates the calculation of minority interests. - Runs equity valuations. - Generates financial investment/net equity eliminations for individual financial investment events with automatic goodwill calculation. This management type is recommended for statutory consolidated financial statements. |
| Relationships and percentages only | - Automates the calculation of minority interests. - Runs equity valuations. - Does not automatically generate financial investment/net equity eliminations for individual financial investment events This management type is not suitable for complex statutory consolidated financial statements. |
| No management | - Only calculates minority interests if the percentage shares are calculated manually by the user and overridden in the consolidation area. - Does not automatically run financial investment/net equity eliminations for individual financial investment events, or equity valuations. This management type is only suitable for consolidated financial statements in the management setting, especially if they only comprise the Profit and Loss. |
Data managed in the ownership structure register¶
The following types of data are managed in the ownership structure register:
| Data type | Description |
|---|---|
| Shareholding relationships with ownership percentage | Allow you to automate the calculation of minority interests and run equity valuations. Without these data, the user has to automatically calculate the percentage shares in group entities and override those values on the consolidation area. |
| Financial investment carrying values | These indicate the value of the owner entities' financial investments, with the relative FX rates. These allow you to generate eliminations for individual events. |
| Net equity values | These indicate the net equity value of the owned entities, with the relative FX rates. These allow you to generate eliminations for individual events. |
Note: eliminations can also be carried out considering the financial investments as normal intercompany entries. However, automatic mechanisms cannot be used in this mode.
Specific features of financial investment data¶
Data related to financial investment relationships are not entered by scenario/period but by process. Specifically, they are entered on the event scenario (which is a fictitious scenario) associated with the process. This makes it possible to define different shareholding relationships depending on the data collection process being run. This management type is particularly advantageous in statutory settings where the shareholding relationships are very detailed compared with management settings, where the ownership structure register is not used or is used in a shortened form.
Financial investment events¶
For every financial investment event, the following information must be registered:
| Element | Description |
|---|---|
| Event | Type and description of the event that occurred (see Financial investment events). |
| Financial investment entry | Value of the change in the financial investment due to the event (see Financial investment entry). |
| Owned entity net equity | Net equity of the owned entity when the value of the financial investment changed (see Owned entity net equity). |
| FX rates linked to the event | (Only if the entities involved have the same currency or have a currency other than the consolidation currency) Generic FX rates linked to the event, which the system uses to generate the financial investment eliminations (see FX rates definition). |
| Specific FX rates | (Only if the entities involved have the same currency or have a currency other than the consolidation currency) FX rates for the net equity and financial investment accounts. These will be used to override the FX rates that are valid for all event accounts (see FX rates definition). |
To insert a financial investment event, the following preparations must be made:
- The ownership structure register accounts must be defined (see Account configuration for the ownership structure register).
- The type of relationship between the owner entity and the owned entity must be defined (see Relationship Type between owned entity and owner entity).
Change in the consolidation area¶
If changes to the ownership structure register take place, it may be necessary to update the outcome of the definition of non-locked consolidation areas linked to the selected process. The change in the consolidation area has material consequences. Changing the consolidation scope changes the entities involved in consolidation and the percentage by which they are influenced by it. To update, use the Update Consolidation areas function (Ownership Structure Register page). With this operation, CCH Tagetik checks the consolidation area definition table and updates the entities' percentages according to the detected changes.
Whenever the consolidation area is changed, it may be necessary to rerun the data processing from the consolidator cockpit to obtain results that are consistent with the new scope. See .