A form or situation of non-controlling interest (NCI) that involves, or arises from, holding of a minority stake by certain shareholders who do not actively take part in an entity’s management and decision-making. Passive or inactive non-controlling shareholders do not have any special arrangement with the entity that may otherwise entail any active role such as a seat on the entity’s board of directors (BOD) or involves in specific areas or aspects of its activities or operations.

Passive non-controlling interest is usually held by investors who solely seek to get a financial return on their investment.