Associate and Fellow Subsidiary

1. B&C are fellow subsidiaries of A.

2.No relation between B and D. B is a wholly owned subsidiary of A and D is an associate of A.

3. C& D: No relation. C is a subsidiary of A and D is an associate of A, provided D is not a joint venture.

4.E&C are fellow subsidiaries of A. E is an Indirect/ Step down wholly owned subsidiary of A and C is a direct subsidiary of A.

5.No relation between E and D. 

The term 'Associate' has not been defined in the Companies Act, 1956. However, as per Accounting Standard 23 - Accounting for investment in Associates for consolodated financial statements', the term'Associate' means an enterprise in which the reporting Company has signiifcant influence but which is neither its subsidiary of joint venture'. Significant influence means the right to participate in financial/operating policy decisions but not the right to control such policies. 

So in my opinion, since A holds 50% of equity interest in D and if D is not a joint venture, and the remaining 50% of equity interest is widely scattered, then it can be said that A exercises significant influence over D.

As per Accounting Standard 27, Joint Venture means a contractual arrangement between two parties to undertake a common economic activity which will be subject to joint control.

God Bless

CS Udit Sharma

Thank You Udit. Really Appreciate your help :) God Bless  you too !

Originally posted by : udit sharma
	The term 'Associate' has not been defined in the Companies Act, 1956. However, as per Accounting Standard 23 - Accounting for investment in Associates for consolodated financial statements', the term'Associate' means an enterprise in which the reporting Company has signiifcant influence but which is neither its subsidiary of joint venture'. Significant influence means the right to participate in financial/operating policy decisions but not the right to control such policies.  So in my opinion, since A holds 50% of equity interest in D and if D is not a joint venture, and the remaining 50% of equity interest is widely scattered, then it can be said that A exercises significant influence over D. As per Accounting Standard 27, Joint Venture means a contractual arrangement between two parties to undertake a common economic activity which will be subject to joint control.   God Bless CS Udit Sharma

 Totally agree with Udit,

In Numerical terms you can also Remember

If Holding is

>50% - It becomes a Subsidary

>20% but <50% - it becomes Associate

Remember above is only Threashold limit and Not the Substance over the form.

what is Associate & fellow CS