Funds Transfer

I suggest that it should be allowed to transfer funds. But only internal transfers e.g Company A forms Company B and C. I suggest that ‘A’ can send funds to ‘B’ or ‘C’, vice-versa. But ‘B’ cannot send funds to ‘C’ directly. It must go though 'A’s account.

Another senerio, ‘B’ forms Company B#’ and wants to transfer to ‘C’. it must follow the rule: ‘B#’ - ‘B’ - ‘A’ - ‘C’.

It will help the player serve the passengers and spur-on development.

My view is that funds should be transferable between holding and the enterprises which belong to that holding, so if my holding is making profitable returns from investments on the exchange and also the dividends from the subsidiaries, that should be re-investable. BUT, that brings in the issue of shares and how they are divided. There’s no actual financial benefit to you other than growing the airline if you aren’t getting more shares for providing the extra money.

That actually what I’m saying in a nutshell. There is not suppose to be a financial benefit for the company in general. There is only suppose to be benefit for the EXACT subsidiary the funds are being transferred to.

Hi,

it should be okay to transfer funds between a holding and its subsidiaries if the subsidiary is not on the stock market.

It’s different if a subsidiary is public. The value of shares is linked to the value of the company. If you invest extra money in your subsidiary, you give a present to your share holders. If you transfer money from the subsidiary to your holding, you steal money from your share holders. Both could lead to tricky situations.

Jan

Maybe the cleanest way to handle this is to allow loans between holdings and enterprises, so the money would show up on the balance sheet as a distinct item from equity. I guess you could go further and envisage a game where anyone can lend money to anyone else at whatever terms the parties care to agree to. That way the market should (in theory) determine an equitable interest rate independently of the AS bank. Of course you have to consider what happens in event of insolvency of either party - you could have domino-style bankruptcies - that’s the point where the game could be as as real as it gets And bear in mind that if an enterprise borrows money privately, this will show up in the balance sheet and reduce the credit rating for borrowing from the AS bank.