An associate (associate / company) is a company in which another company or group holds a significant, but not controlling stake (most often 20% or more voting shares, but less than 50%). In this case, the investor company can have a significant impact on the decisions on the trade and financial policies of the associated company, although the latter remains independent, with its own management and its own annual reporting, without becoming a subsidiary of the holding company [1] .
The “significance” of the influence of the investing company is manifested in the fact that [2] :
- its representatives are members of the board of directors of the associate;
- she participates in the discussion of dividend payment and income distribution;
- it can influence management policy;
- its leaders and the leaders of the associated company exchange important information and can change places among themselves;
- serious financial transactions are taking place between the investor and the associated company.
The international financial reporting standard for associates is called IAS 28 and has been adopted in international practice since 1990 (periodically amended). In Russia, it was introduced on July 18, 2012, according to the order of the Ministry of Finance of the Russian Federation No. 106n; Now this order has lost force, and the application of IAS 28 in the Russian Federation is regulated by the current order of the Ministry of Finance dated December 28, 2015 No. 217n [2] .
Notes
- ↑ G. M. Ghukasyan Economics from A to Z. Thematic reference book (Moscow: Infra-M, 2007) ISBN 978-5-16-003004-3 - see page 385.
- ↑ 1 2 Appendix 18 to Order of the Ministry of Finance dated December 28, 2015 No. 217n: “International Standard for Financial Reporting (IAS) 28“ Investments in Associates and Joint Ventures ”” (as amended on June 4, 2018) . Electronic fund of legal and regulatory technical documentation. - see paragraphs 5-6. Date of appeal October 26, 2018.