Madrid Ltd. has a 49% holding in King Holding Company (KHC), which is located in a foreign country. KHC’s business is to import goods from Madrid Ltd. and sell them locally. Local laws do not permit foreign investors to hold a majority stake or to have a majority of board members on companies in that country. Thirty percent is held by a local investor, and the investment is funded by Madrid. A local entrepreneur, who is also the CEO, holds the remaining 21%. Madrid has a casting vote on decisions about the relevant activities. How should this investment be classified?
A subsidiary
An associate
An investment
A joint venture
