Associated company

Updated: Aug 20, 2021

Often a company has a substantial interest in another to the extent that they might be de facto, if not de jure, partners m some venture. Whilst the holding of the former company is not such as to render the latter a subsidiary company as legally defined, the relationship needs to be drawn attention to and the latter is referred to, in the accounts of the former, as an ‘associated company’.

Prior to 1967 an associated company was treated virtually as a trade investment of the principal company, and real control could often be operated without the legal requirements imposed upon a holding company proper. The Companies Act 1985 now makes it necessary for details of any holding in another company, in excess of 10 per cent of any class of share, to be disclosed in the accounts of the investing company.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
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James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.