Non-controlling interest, abbreviated NCI, is the IFRS term for the equity in a subsidiary that is not attributable, directly or indirectly, to the parent. IFRS 10 introduced it to replace the older wording minority interest, and the change was deliberate rather than editorial.
The old term implied a small holding. The new one describes the actual criterion: what matters is the absence of control, not the size of the stake. An investor holding 45 percent of a subsidiary controlled by a parent with 55 percent is a non-controlling interest despite holding almost half the capital. Conversely, a 30 percent holder with contractual control rights may not be one at all.
IFRS 3 offers two measurement options at the acquisition date, and the choice is consequential. The partial goodwill method measures NCI at its proportionate share of the acquiree's identifiable net assets. The full goodwill method measures NCI at its own fair value, which recognises goodwill on the non-controlling share as well. The second produces a higher NCI and higher goodwill on the same transaction, and the election is made deal by deal.
French rules offer no such option: only the equivalent of partial goodwill applies. This is one of the recurring divergences between the two frameworks, alongside the treatment of proportionate consolidation.
Whichever option applies, NCI is calculated on the equity of an entity consolidated under full consolidation, after internal flows have been removed. Phacet validates that base upstream: the intercompany flow reconciliation agent confirms reciprocal positions before packages are submitted, each documented by a traceable audit trail.
