Discuss the potential for tweety pie ltd to be classified

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Question

Scrooge Ltd and McDuck Ltd own 55% and 45% respectively of the ordinary shares that carry voting rights at a general meeting of shareholders of Beagle Boys Ltd. McDuck Ltd also holds debt instruments that are convertible into ordinary shares of Beagle Boys Ltd.

The debt can be converted at a substantial price, in comparison with McDuck Ltd's net assets, at any time, and if converted would require McDuck Ltd to borrow additional funds to make the payment.

If the debt were to be converted, McDuck Ltd would hold 70% of the voting rights and Scrooge Ltd's interest would reduce to 30%. Given the effect of increasing its debt on its debt-equity ratio, McDuck Ltd does not believe that it has the financial ability to enter into conversion of the debt.

whether McDuck Ltd is a parent of Beagle Boys Ltd?

Sylvester Ltd owns 40% of the shares of Tweety Pie Ltd; no other party owns more than 3% of the shares. The annual general meeting of Tweety Pie Ltd is to be held in one month's time. Historically, only the holders of around 75% of the shares were present and voted in each of the previous years' annual meetings.

Discuss the potential for Tweety Pie Ltd to be classified as a subsidiary of Sylvester Ltd.

Reference no: EM132381636

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