A stake in an entity that constitutes less than 50% of the total shares that are controlled by voting rights. In other words, minority investors cannot exercise control over an entity by way of votes, and therefor have very limited or no influence on the decision-making and management of that entity. Normally, minority interest stakes range between 20% to 30%. In the books of an entity, minority interest is projected as part of consolidated profit and loss that comes under ordinary operations after taxation. Under international accounting norms, the minority interest falls under equity.

On the statement of financial position, minority interest appears as a separate line item, in order for the users of financial statements to have an idea about the controlling interests (majority interest) in the parent company.

Minority interest is usually classified as active minority interest or passive minority interest. Non-controlling interest is usually classified as active non-controlling interest or passive non-controlling interest. In passive interest, the non-controlling stake usually doesn’t exceed 20%, in which case a entity cannot exercise any influence over the other. On the other hand, the stake of an active interest ranges between 21% and 49%, and an entity with such active interest would have voting rights whereby it can influence the other entity.

Minority interest is also known as a non-controlling interest (as opposed to a controlling interest).