What Is Minority Interest (Non-Controlling Interest)?

Minority interest — now usually called non-controlling interest (NCI) — appears in consolidated accounts when a parent company owns most, but not all, of a subsidiary. It's the slice that belongs to other shareholders.

The simple idea

Suppose Parent Ltd owns 80% of Subsidiary Ltd. When it prepares consolidated accounts, it combines 100% of the subsidiary's results (because it controls it). But 20% of that subsidiary actually belongs to outside shareholders. Minority interest is the accounting entry that sets aside that 20% so it isn't wrongly attributed to the parent's own shareholders.

Where you see it

You'll find minority interest in two places: on the balance sheet (the outside owners' share of the subsidiary's net worth) and in the income statement (their share of profit, deducted to arrive at profit attributable to the parent's own shareholders).

Why it matters

If you ignore minority interest, you'd overstate how much of a group's profit and assets really belongs to the company you're analysing. It's one of the subtle reasons consolidated numbers need careful reading — and why our financials carry a minority-interest line where companies report it.