Definition of Associate company:
The actual definition varies greatly from jurisdiction to jurisdiction and in different fields, as the concept of the associate company is used in economics, accounting, taxation, securities, and beyond.
Firm over which another firm exercises a degree of control which is less than the degree of control exercised over a subsidiary. In accounting, such control is typically taken to mean the ownership of at least 20 percent of voting shares, and some say in the management of the associate firm. Associated companies usually have interlocking directorates to ensure they have common policies and complementary objectives.
An associate company, in its broadest sense, is a corporation in which a parent company possesses an ownership stake. Usually, the parent company owns only a minority stake of the associate company, as opposed to a subsidiary company, in which a majority stake is owned.
How to use Associate company in a sentence?
- Firms that possess stakes in associate companies must accurately report those investments on their consolidated financial statements.
- Unlike a subsidiary company, the parent will only own a minority or non-controlling stake in the associate company.
- Associate company relationships often occur with joint ventures.
- An associate company is a firm that is owned in part by a parent company entity.
Meaning of Associate company & Associate company Definition