Brief Definition
Non-controlling interest (NCI), also known as minority interest, refers to the portion of a subsidiary company’s equity that is not owned by the parent company. In other words, it represents the shares in a subsidiary that are held by outside investors.
Further Explanation
Non-controlling interest (NCI), also known as minority interest, refers to the portion of a subsidiary company’s equity that is not owned by the parent company. In other words, it represents the shares in a subsidiary that are held by outside investors. When a parent company owns more than 50% of a subsidiary but not 100%, the portion owned by other shareholders is called the non-controlling interest.
Example:
If a parent company owns 70% of a subsidiary, the remaining 30% belongs to external shareholders. This 30% is reported as non-controlling interest in the consolidated financial statements.