"Associate Company" under Companies Act, 2013

Associate Company is defined in Section 2(6) of Companies Act, 2013, Associate Company is defined as “in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.”

Important points:
1. The Associate Company means a Company in which other Company has Significant influence.

2. Significant influence means to hold minimum 20% of total share capital or business decisions under an agreement.

3. A Subsidiary is not an Associates Company.

4. The shares held by a company in another company in a 'fiduciary capacity' shall not be counted for the purpose of determining the relationship of 'associate company' under section 2(6) of the Companies Act, 2013 – MCA

5. As per Companies (Specification of definitions details) Rules, 2014, the Term total share capital means:-
a)      paid equity share capital; and
b)     Convertible preference shares.


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