Question

Explain the following term/concept.

Associate company

Answer 1

(1) Term associate means an institution or a company having a subordinate position in or admitted to only partial membership of another institution or a company.

(2) Accordingly, an associate company is one over which another company exercises a significant (means at least 20% of total capital or decision making power) degree of control but the degree of control so applied is less than the degree of control exercised over the subsidiary company.

(3) An associate company in relation to another company means a company over which that another company has significant control or influence but the company over which such significant control applied is not a subsidiary company.