Section 2(6)Chapter 1

(6) Associate Company

Regulation 2

(1)

(b)

of LODR

‘associate company’, 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.

Explanation

For the purposes of this clause, “significant influence” means control of at least twenty per cent of total share capital or of business decisions under an agreement

Explanation

For the purpose of this clause—

(a)

the expression “significant influence” means control of at least twenty per cent. of total voting power, or control of or participation in business decisions under an agreement;

(b)

the expression “joint venture” means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement;

Notes, amendments & references (3)

MCA clarified that 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’ vide Circular 24/2014 dated 25 June 2014. To view the clarification, Click Here

Explanation . Substituted vide Companies (Amendment) Act, 2017 dated 3.01.2018, effective from 07.05.2018.To view commencement notification, Click Here

To view the notification of Companies Amendment Act,2017 Click Here