# Associate Company – Section 2(6)
## 1. The statutory test
> An associate company, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary of the company having such influence, and includes a joint venture company.
So three things must be true for Co. B to be an associate of Co. A:
1. Co. A has significant influence over Co. B.
2. Co. B is not a subsidiary of Co. A.
3. A joint venture company is automatically included as an associate.
## 2. What is "Significant Influence"?
Significant influence means either of the following:
- Control of at least 20% of total voting power in the other company, OR
- Control of, or participation in, business decisions under an agreement.
Either limb is enough. The 20% trigger is objective; the 'agreement' limb is qualitative.
## 3. What is a "Joint Venture"?
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.
Key idea: joint control + rights to net assets (not just rights to outputs).
## 4. The Fiduciary-shareholding carve-out
Shares held by Company A in Company B in a fiduciary capacity are NOT counted when checking whether B is an associate of A.
Fiduciary capacity: a person who holds a legal/ethical relationship of trust with another and prudently takes care of money or other assets for that other person. The fiduciary is not the beneficial owner.
## 5. Mental model – Subsidiary vs Associate
| Test | Subsidiary | Associate |
|---|---|---|
| Voting power threshold | More than 50% (control) | At least 20% (significant influence) |
| Nature of relationship | Control | Influence |
| Joint venture | Not relevant | Automatically included |
If a company satisfies both tests, it is treated as a subsidiary — associate status is the residual category once subsidiaries are excluded.