Under Section 2(6) Companies Act 2013, an 'associate company' in relat…

Question

Under Section 2(6) Companies Act 2013, an 'associate company' in relation to another company means a company in which that other company has:

Accepted Answer

B. a 'significant influence' (at least 20 per cent of total voting power, or control of/participation in business decisions under an agreement) but is not a subsidiary

1. Section 2(6) defines 'associate company': a company in which that other company has a SIGNIFICANT INFLUENCE, but which is not a subsidiary, and includes a joint venture company.
2. Explanation defines 'significant influence' as control of at least 20 per cent of total voting power, or control of or participation in business decisions under an agreement.
3. The 2017 Amendment substituted 'total voting power' for 'total share capital'.
4. Associate company is consolidated by equity method under IND-AS 28 (whereas subsidiary by line-by-line consolidation under IND-AS 110).
5. Hence option B is correct.
_Source: Companies Act 2013 (Act 18 of 2013), Govt. of India MCA — Companies Act 2013, Section 2(6); IND-AS 28_

Answer

100 per cent shareholding via fully owned subsidiary status, with full board control (cf. Companies Act 2013, Section 2(6); IND-AS 28)

Answer

any minority shareholding regardless of percentage, exceeding one share (cf. Companies Act 2013, Section 2(6); IND-AS 28)

Answer

no shareholding at all, but a common Chairman of the Board of Directors (cf. Companies Act 2013, Section 2(6); IND-AS 28)