# Associate Company [Section 2(6)]
## Concept
An associate company captures a relationship of significant influence that falls short of control. It is a new concept introduced by the Companies Act, 2013 (did not exist under the 1956 Act).
## Definition – Section 2(6)
An associate company, in relation to another company, means a company in which that other company has —
- significant influence, but
- which is not a subsidiary of the company having such influence, and
- includes a joint venture company.
## What is "Significant Influence"?
Significant influence means either of the following:
1. Control of at least 20% of total voting power; OR
2. Control of, or participation in, business decisions under an agreement.
Note: The threshold is "at least 20%" — i.e., 20% or more. Below 20%, there is no significant influence (in voting-power terms).
## What is a "Joint Venture"?
A 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.
A JV company is expressly included within the definition of associate company.
## Distinguishing Associate vs. Subsidiary
| Feature | Subsidiary | Associate |
|---|---|---|
| Voting power | More than 50% | At least 20% but not exceeding 50% (typically) |
| Relationship | Control | Significant influence |
| Section | 2(87) | 2(6) |
| Inclusion | — | Includes JV |
## Why This Matters
Associate company status triggers various compliance obligations: related-party transaction rules (Section 188), consolidation requirements, restrictions on certain transactions, and disclosure obligations.