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Definition of group company

Shridhi Jain (Company Secretary) (1678 Points)

21 June 2011

What is the definition of group companies and associate companies ? What is the difference between the two?

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7 Replies

SkDash (CS (Member) CWA (Final)) (909 Points)
Replied 21 June 2011

These are all informal words not defined anywhere. But we call all companies are uder a group, associates, affiliates etc when its under the control of same promoters may be by virtue of shareholding or directorship

Rakesh Dhanuka (Company Secretary) (478 Points)
Replied 21 June 2011

Refer Accounting Standard - 18.

Archana (Company Secretary) (165 Points)
Replied 21 June 2011

Group companies are companies promoted by same promoters and/or any promoter group i.e relatives as defined under co.'s act. It is not defined anywhere but it can be recognised by directors/shareholders pattern or even the common name of group used, if any.

Associate company is also same but it is called associate when there are any transactions between such group companies which are known as related party transactions under the act.

Correct me if wrong...

thnx

Sumit Jaiswal (Company Secretary) (818 Points)
Replied 21 June 2011

The term group company is not defined. It simply means a set of companies controlled by a common apex company. To call a company an associate of another, the another company must have shares in the first mentioned company atleast 26% but not exceeding 50% (AS 18).

Other views welcome.

CA Sunil Agarwal (C.A) (368 Points)
Replied 21 June 2011

i want to coorect mr sumit as per AS 18 Associate mean where one company control other company 20 percent paid up share capital but not exceedind 50 percent .