What Is an Associate Company?

Associated companies

Associates

Associated companies
A company controlled by two or more companies. According to generally accepted accounting standards, if Company A has significant influence on the operation and management of Company B, but has not reached the level of effective control, Company B is an associate of Company A. Shareholdings in associates are usually between 20% and 50%.
company name
Associates
Foreign name
associated companies
Company Type
Private
Shareholding
Between 20% and 50%
Associated companies
According to the General Principles of the Civil Law, joint ventures have the following three forms:

Corporate associate

This is the closest and most stable form of joint venture. It refers to a joint venture in which the parties to the joint venture use new assets, such as property, technology, and labor, to form a new economic entity and to independently bear civil liability. Article 51 of the General Principles of the Civil Law stipulates: "If an enterprise or an enterprise or an institution forms a joint venture to form a new economic entity, which independently assumes civil liability, and meets the requirements of a legal person, it shall be approved by the competent authority and registered as a legal person. "The joint venture formed under such an association is a legal person. Its establishment, change, and termination, as well as its capabilities, capacity, and scope of responsibility, are applicable to the relevant provisions of the corporate legal person. The rights and obligations of all parties, the distribution of benefits, the commitment of risks, the creation of management agencies, and the joining and withdrawal of members, etc. Provided by the articles of association

Associated Partnerships

This is a semi-close and relatively stable form of joint venture. It refers to the joint operation of the parties to the joint venture with capital, technology, labor, etc. The parties to the joint venture shall, in accordance with the proportion of the capital contribution or the agreement, take their own ownership or operation and management. The property is affiliated with civil liability. Article 52 of the General Principles of the Civil Law stipulates: "If joint ventures between enterprises, or between enterprises and institutions, are jointly operated and do not meet the requirements of a legal person, the parties to the joint venture shall, in accordance with the capital contribution ratio or the agreement, use their The property under management and management bears civil liability. If joint and several liability is imposed according to the provisions of laws or agreements, joint and several liability shall be assumed. "An enterprise formed under such an association does not have the conditions of a legal person. Unlimited liability

Contractual associate

This is a loose, simple joint form. It refers to the joint venture which neither contributes capital nor forms a new economic organization, but cooperates with each other in accordance with the contract, operates independently and bears civil liability. Article 53 of the General Principles of the Civil Law stipulates that: "In the case of joint ventures between enterprises or between enterprises and institutions, each of which operates independently according to the contract, its rights and obligations shall be stipulated in the contract, and each shall bear civil liability." The form of joint venture is just a more stable contract relationship between the parties to the joint venture.

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