The concept of affiliated persons

In Russian law the term "affiliation" appeared in 1995, are Affiliated persons associated in respect of the property and is able to exert influence on each other. Among them, the members of the Board of Directors, Supervisory Board or other management body.

A necessary attribute of the affiliate are dependency relationships between the legal entity and the affiliate. They can be financial, contractual or family.
In the Russian legislation it is forbidden to give affiliates the procurement documentation, which ensures transparency and fair competition.

Sometimes affiliates can be individuals who influence the actions of the company, technically and legally not having such authority.

The concept and features of affiliates

The term "affiliates" was borrowed from foreign law, and has spread since 1992, But in Russia this concept is used in somewhat different from the Western value. According to the Federal law 948-1, a key symptom of affiliation is the ability to influence the economic activities of third-party companies and individual entrepreneurs.

If Europe affiliated companies - dependent on other firms, in Russian legislation the term also applies to dependent and dominant individuals.

Difficulties in the interpretation of affiliated companies related to a broad interpretation of the concept. In a narrow sense, referred to as affiliated company in which another has a minority interest (she owns less than 50% of shares). Affiliates linked in the property and the organizational plan.

In a narrow interpretation of the affiliate is a company in which another has a minority interest, i.e. its ownership is less than 50% of the voting shares. The company, which has more than 50% of the shares of another, called the parent. Company with minority shares of a subsidiary or subsidiary company. The subsidiary company is always affiliated, but the term subsidiary preferred when there is control over a majority of the stock of the considered company.
TNC remote from the parent company regions often resort to the creation of affiliates.

The company may act as a branch of the parent company, thus, it is involved in the management of the Affairs of the affiliate on the basis of the contract. Therefore, the branch and regional network called affiliate network.

An affiliated company operates its own economic activity, but in fact fully supports the policy of the parent company and depends on its decisions. Often the affiliation is applied for the artificial fragmentation of business to optimize the tax base.