Associate and Fellow Subsidiary

Hi,

Can someone please explain :

1. Fellow Subsidiary

2. Associate

 

Case Study : Assume, 5 companies : A,B,C,D,E

B is a 100 % subsidiary of A and A holds 85% shares in C and  50% shares in D.

E, in turn, is a 100% subsidiary of  B

Whats the relation between : 1. B & C , 2. B & D, C &D, E & C and E & D

Please explain.

Thank You

Replies (5)

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

 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
02 November 2026
Audit Executive

SRJP & Co LLP

Kochi

CA Inter

View Details
Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details
Company
ARTICLESHIP 25 October 2026
Article Intern (CA Articleship)

Arpan Bohra & Co

Hyderabad

CA Inter

View Details
Company
16 October 2026
CA article trainee

Zerdi & Co. Chartered Accountants

Pune

CA Inter

View Details
Company
Featured 27 October 2026
semi-qualified CA

Saini Pati Shah & Co LLP, Chartered Accountants

Mumbai

CA Final

View Details
Company
23 October 2026
Sr. Accountant

SANKARAN & KRISHNAN

New Delhi

B.Com

View Details
Company
ARTICLESHIP 22 October 2026
Articleship intern

Srinath Manikanta

Hyderabad

CA Inter

View Details
Company
14 October 2026
Accountant

Rize.farm

Bengaluru

B.Com

View Details