Very often in a professional environment you can hear such a legislative term as “affiliated person”. What this term represents and who can usually be called such a term in the legal field, we will consider in the article.
The concept of “affiliated”: what is it and where did it come from?
First, let's figure out what the concept of “affiliated” itself means and to whom it can be addressed. IN colloquial speech this adjective practically never appears, so most people simply do not know what we are talking about. However, often this word can be heard in the news or analytical articles when it comes to fraud in the economic or legal sphere, as well as operations in these areas that are obscure to the average citizen. You can often hear about affiliates or law firms and even about affiliated Internet resources.
The word itself has Latin roots and originally referred to the word "son" (later from this word the word "branch" was formed), and the later English version affiliate literally means "to attach something", and the English noun affiliation is translated as "connection" or "compound".
Thus, we see that the word “affiliated” when translated into colloquial Russian means connected or subsidiary.
Since the word is not very common in Russian, it is often you can meet different options its Russian transcription, however, the form "affiliated" is the only correct one.
As we understand, an affiliated object is considered to be one on which the activities of other, less significant ones depend. Now let's look at what it is this concept from a legal point of view.
Who can be an affiliate or company?
So, from a legal point of view, an affiliate is a person or organization that capable of having a direct impact for the work of another legal entity, be it a large company or an individual entrepreneur.
Companies can also think so, and not only subsidiaries, but also those structures that have the right to manage the activities of other companies and legal organizations.
This concept itself does not exist in the Russian tax code, but it has been replaced by a more understandable name - an interdependent person.
Who is considered an affiliate: list of personalities and structures
For a company or other organization that is considered a legal entity, affiliates are categories such as:
- sole managers, board of directors or supervisory structure;
- citizens who are in the same group as the organization itself;
- persons who own more than 20% of the shares of this structure or its authorized capital;
- a company in which the structure in question has 20 percent or more of shares or capital (it is worth noting that affiliation is a two-way process);
- if the company is part of a financial or industrial group, then this is the leadership of this group.
In the case of individual entrepreneurs, affiliated persons are:
- those persons who are included in the same group of persons as the entrepreneur;
- a company or firm in which the entrepreneur has a share or part of the authorized capital in an amount exceeding twenty percent.
Group of persons with an affiliate: who are they and who can be part of it?
When we listed who can act as affiliates in relation to legal entity or an individual entrepreneur, a group of persons was mentioned in which the company or entrepreneur may belong. So, the members of such a group in the case of individual entrepreneur– these are his immediate family, including spouses, children, parents, brothers or sisters. But group members for a company are categories of persons who:
- can control more than half of the voting rights of the company's shares or more than half of its share;
- solely manage this company or structure;
- have the right to give instructions that require unquestioning execution;
- represent the majority of the supervisory and executive staff of the company’s management body;
- have the right to appoint or elect a nominee director of the company;
- take part in the selection of most of the members of the company's supervisory and executive staff.
It is quite natural that members of a particular group can intersect and unite. For example, if two members of two different groups have great influence in the third group, but from a legislative point of view the first two groups should be considered as one.
Is there a need to provide information about affiliates?
According to the legislation, which is devoted to the problems of monopolization, joint-stock companies are required to provide such lists authorities. Such a report is required both to government agencies, to shareholders, and for accounting reports.
Why is this accounting necessary? The fact is that in cases where some entrepreneurs are able to strongly influence commercial structures, phenomena such as:
- biased and inflated pricing;
- persecution of competing structures using non-market methods;
- formation of monopolies.
If such a process is uncontrolled, then this leads to the destruction of entire markets, and in fact at different levels. IN Russian Federation Such records are maintained by the Antimonopoly Service.
What is an affiliate site?
There is also the concept of an affiliated Internet resource. In this context, this concept means something slightly different than in the legal context. Thus, an affiliate site is a site that created for the purpose of promotion main It can also be called a doorway or satellite. Developers can create huge amount affiliated resources, which will ultimately lead the user to the site that is the object of promotion.
As you can see, when explaining the concept of affiliation, it becomes more understandable and you can understand what your interlocutor means when mentioning certain affiliates in a conversation or talking about the presence of affiliated sites around some major resource on the Internet.
The concept of affiliates is quite new not only in theoretical but also in practical matters. In our article we will tell you what these entities are, where the institution of affiliated persons is applied and how their records are kept.
Affiliates – concept and their types
This phrase began to appear in everyday life in the mid-90s of the last century. For the first time, “affiliated persons” were mentioned in the appendix to the decree of the “President of the Russian Federation” in 1992 - then we were talking about investment funds.
IN in a broad sense Affiliation is proximity to something, since the English version of this word “to affiliate” is translated as “to connect, to join.” This term is also interpreted as introductory membership. It should be noted that affiliates influence each other in any activity - economic or business. We can say that they are represented by one group
This term was reflected in legislation in 1995, and three years later its official definition appeared.
Affiliated persons - individual entrepreneurs or citizens who influence entrepreneurial activity, to other people or organizations. There are some nuances according to which an entity can be considered controlling in relation to the company. For example, if we are talking about an OJSC, then an affiliate is a person or entrepreneur who:
- Has at its disposal 20% of the shares, while the citizen has the opportunity to participate in the activities of the company.
- Have over half of the shares at their disposal - in this case, the person has serious influence on the company, participates in the adoption important decisions(we are talking about “voting” shares).
Article 4 itself Federal Law The Russian Federation defines this concept. But regulations also decipher the composition of this category of persons. First of all, this includes those entities that are associated with the control process, for example, large shareholders, persons involved in the management of the company, etc.
As a rule, affiliation implies the possibility of influence of one side of an activity on another. It is important to note that this refers to relations of a managerial nature, not a property one. Property dependence is defined as a consequence, but not the main condition for the emergence of control.
Classification of affiliates - important nuances
The Law “On Competition” stipulates the following classification of such objects:
- Organizations. For example, one of the owners, a member of the management body ( shining example– board of directors), persons owning at least 20% of shares, etc.
- Individuals leading individual entrepreneurs. Citizens related to those who conduct business, an organization in which the individual entrepreneur controls 20% or more of the votes, shareholders, etc.
- Entrepreneurs participating in financial and industrial communities. For example, members of the board of directors, management structures and the like.
Scope of application of such entities
This category is often found not only in the theoretical part of the activities of a company or individual entrepreneur, but also in the practical. However, many people do not clearly understand what an affiliate means and its functions, which often leads to serious mistakes when planning economic activities.
Most often, this term is associated among entrepreneurs with corporate law. It is usually used in the following cases:
- In the process of identifying those persons who are interested in the activities of the enterprise, which can lead to the conclusion of expensive transactions.
- To identify directors who have a decisive “vote” in decision making.
- To determine the subjects to whom you need to provide data on the company’s activities.
- In the process of identifying the subjects to whom the company must provide all data on the company’s operations.
- To determine the list of persons who have crossed the 30% threshold when purchasing shares.
Interaction of affiliates
How exactly do such objects interact? As an example, we can consider the relationship between the main company and its subsidiary, which is almost 100% dependent on the main one. Creating last option, the company can increase its level of detail. At the same time, there is one difference between the main company and the branch - the complete legal independence of the company.
At the same time, affiliates have not only rights, but also responsibilities, which is also important to understand. Let's talk about the latter. First of all, this is the need to notify the OJSC about the shares held by affiliates. In this case, the request must be sent in writing, indicating in the document the number of shares, their type and other important information.
At the same time this information must be received within the specified time frame from the date of purchase of shares. Although the law does not provide for serious penalties for such entities due to failure to provide information, some sanctions do exist against them.
For example, if an OJSC suffered serious losses (of any nature) due to affiliates, then they will have to pay compensation for the entire amount of damage caused - this is discussed in more detail in Article 15 of the Civil Code of the Russian Federation.
Responsibilities for accounting of affiliates
Each organization must keep records of such entities, and their list is transmitted to the appropriate authorities that are responsible for regulating the market. Thus, if the rules for providing information are violated, a fine may be imposed on the organization by the antimonopoly authorities.
Similar requirements apply to affiliated persons of an LLC. The list of interested parties must be posted on the company’s personal website on the Internet - these requirements are very easy to explain. The fact is that such data will be in demand when concluding contracts where affiliates are involved. This may also include agreements of interest.
The question, of course, arises as to whether a CJSC needs to submit a list of its affiliates if such rules apply to LLCs and OJSCs, since such a company usually does not publicly disseminate information about its securities, etc. Despite the differences in the activities of such companies, CJSCs are also required to report on their affiliates, albeit in a free format. But if a company always posts information about shares on the Internet, then it should also post a list of interested parties there.
Accounting procedures and liability issues
For example, you can take any list of affiliates, which will necessarily contain the following information:
- Full and short name of the company, their postal address.
- FILE of the subject, residential address, if we are talking about individuals.
- Reasons for these persons to be called affiliated.
At the same time, there are several options for punishment for errors made when compiling this list or the order of presentation of information. Let's take a closer look:
- Administrative, which occurs if the company did not provide the list completely or missed the deadlines noted in the laws.
- Tax, which occurs in the event of an unreasonable adjustment of prices, if they differ from those accepted on the market. If, during an audit, tax specialists find out that the cost of a completed transaction differs in price from the medium-term price by an average of 20%, this may result in the accrual of fines and penalties. In this case, debt collection will be carried out automatically - the money is simply debited from the account.
- In case of violation of transactions with affiliates. In this case, a fine may also be imposed.
The word “affiliation” is rarely heard in everyday life. everyday speech, since most average citizens have no idea what it means. Meanwhile, it began to appear very often in news reports and various analytical materials. Especially if we are talking about some kind of fraud or simply inaccessible ordinary people operations in the legal and economic spheres, as well as in economic and organizational activities. And here the question arises: affiliation - what is it? It’s worth figuring this out so you can understand what we’re talking about the next time you hear the word.
The concept of affiliation and its origin
This word comes from the English affiliate, derived from the Late Latin filialis, which means “filial”. IN English this word means accession, that is, the term affilation will mean “connection” or “connection”. So, understanding the concept of affiliation, what it is, we are already beginning to understand. It turns out that this is a connection, a connection, a subsidiary of something. If we talk about the correct spelling, then here is “branch”, that is, the correct spelling is “affiliation”.
IN in a general sense This word means the dependence of a certain object on a larger one, its connection or subordination to it. This term is often used in the context of conversations about companies and organizations; one can even consider such a concept as site affiliation.
Use of the term in different situations
So, if everything is more or less clear with the concept itself, then it is worth considering it in different contexts. If we talk about firms and companies, affiliation can also be used here. What this is becomes clear if we say that we are talking about the organization belonging to a large company as a branch. At the same time, a subsidiary may well carry out its own economic activities, own its own reporting, but support the direction of the main company, and also be completely dependent on the decisions of its management. Practice shows that today affiliation is often used to split a business artificially in order to evade paying taxes, which causes a lot of trouble for fiscal authorities and other government agencies.
Affiliates
This concept implies that an individual or legal entity has the right and methods to influence the work of a business entity expressed as an individual or legal entity, since it owns a share of its capital or is a member of the management body of the organization. This is where affiliation lies. What is it, and who can be considered such? Affiliated persons may be members of the supervisory board and the board member of the collegial executive body and others. They also include those who have the right to control more than twenty percent of the capital of the entire company or can influence the above positions.
When a legal entity enters a financial-industrial group, we can say that its members are also However, today this concept is more often used with a negative connotation, since it means participants or firms that have effective leverage over the legal entity, however hiding their presence in its economic activities.
It is also appropriate to use it on the Internet. And here underneath there are sites that are given a supporting role in promoting the main resource, which is the parent one. They are often called satellites or doorways. Usually, an entire network is immediately created, consisting of doorways, which are intended to transfer users to the promoted resource. So, it’s worth considering affiliation, what it means in this context, using the example of the Yandex search engine. Namely, how you can get out from under such a filter and which sites most often fall under it.
If contact information on two sites completely or partially matches, then Yandex perceives them as belonging to the same company, considering them affiliated. He has a special relationship with them - and here his position is that affiliated resources cannot be shown simultaneously in the results of search queries. That is, two of your sites will not appear simultaneously as a result of a search for one keyword, or Yandex will not display either of them at all.
Knowing that Yandex checks for affiliation, you should understand that such sites should not be promoted using overlapping lists of key queries, as this will not allow them to take top positions in search results. In the case when there is no intersection of the list keywords, you can achieve the desired result.
How does this work?
The most relevant site will be shown in the search results for each search query. By this it should be understood that Yandex itself will determine which of them best matches the entered request. Of course, there are other factors that influence the position of a resource in the results: the age of the site, the quality and number of links to it, etc. Most often, the filter includes sites of fairly large companies that create large number resources for each regional center or city.
How to avoid being filtered?
Most often it works automatically. A filter applied in this way is usually removed in the same way, so there is no point in writing long explanatory letters to the search engine support service. All you need to do is eliminate the signs of affiliation and wait until the filter is automatically removed. If you purchased a new domain for yourself, but have nothing to do with sites from the affiliate network, the filter will be removed very quickly. Often, it is enough for Yandex to have a similar range of products on sites, descriptions and similarity of domain names in order to recognize them as affiliated. The situation is aggravated if there is a match in the registration data of hosting and domains.
Affiliate is an organization or individual that is able to directly influence the activities economic company through its participation in capital or through membership in governing bodies.
In this case, a connection is established between persons in a property and organizational sense. All subsequent actions are carried out only with clear coordination.
The parties involved have a direct influence on each other, which subsequently affects the process of forming economic relations.
This term appeared as a result of the transition to market economy in conditions of expanded and complicated economic ties between two economic entities. The following may be positioned as affiliates:
- high officials
- founders,
- shareholders,
- investors.
All of them can have a direct impact on the activities of the organization by participating in the management process. In most cases, the affiliate owns about ten percent of the firm's total available capital.
For legal and physical entities, the affiliate may not be identical. For example, in the first case, this may be a member of the supervisory board or any other management body. It may also be a person who exercises the powers of an executive body represented individually.
In addition, a person who belongs to the same group of persons as a specific legal entity can be called affiliated. If the founder has full rights to control twenty percent of the votes or provided that he is a direct participant in the financial-industrial group, this also allows him to be positioned as an affiliate.
For individuals, affiliates may be individuals who belong to a group that is identical to a particular physical entity. Another option is a legal entity in which the entity is authorized to control a twenty percent number of votes. In this case, they must be voting shares or constitute the authorized capital of the total share of the legal entity.
This term is widely used in business legislation. It is important to remember that affiliates have the responsibility to notify the public in writing of the shares being purchased, including the type and quantity. Moreover, this must be done within ten days after making their purchase. If this is not done, then as a result of such measures the company may face damage, which the affiliate undertakes to fully compensate. Any society must keep correct records of persons of this type. However, this must be done in accordance with all norms of current legislation.
The concepts of affiliated persons and groups of persons define the non-identical degree of connections between individual entities from a legal point of view. The fact is that persons cannot constitute a single subject of law, while a group of persons has full legal personality. However, this does not apply to all business relations, but only to those that are directly related to the field of antimonopoly legislation.
Based on this, it is not difficult to conclude that affiliated persons can be positioned as a generic concept, and a group of persons - as a specific one.
Hello! In this article, you will learn who affiliates are, what rights they have, and how to compile and store a list of such data.
Today we will look at:
- What is included in the concept of “affiliates”;
- What characteristics do they have?
- Why do companies need to maintain a detailed list of affiliates?
Main characteristics of affiliates
The term is increasingly found in economic publications, articles on finance and entrepreneurship.
Affiliates – these are legal entities or individuals that can influence the work of joint-stock companies or private entrepreneurs. They have the opportunity to control the operation of the enterprise and the adoption of important decisions by management.
The name comes from English word"affiliate", which means to attach something. In simple words, affiliation is the exertion by a person of influence on the work of a company, which implies property and organizational relations between them. And the affiliation procedure means that one enterprise or company is included in the structure of another without changes in the management team.
In domestic practice, the main distinguishing features of affiliation are not only the ability to intervene and influence business activities, but also dependent relationships.
They appear:
- If a person has the right to vote at all meetings;
- If it has a share in , a certain percentage of shares;
- There are family ties between members of the board or in the concern;
- If an affiliated person by status ( general manager or chairman of the board) can suspend subordinate decisions.
For enterprises, employees who can influence work through strikes or demands to change are not considered interdependent. wages, cancel the deal. But the owner's son, who runs the subsidiary company and wishing to enter into a promising transaction is already an affiliate.
In any case, the relationship not only takes on a managerial nature, but also affects the distribution of property. The main problem is the possibility of collusion, which will lead to the creation of a monopoly relationship. This is harmful to the economy and creates a serious imbalance in the industry, so affiliates and their transactions are under the systematic control of the state antimonopoly committee.
Who is included in the list for a legal entity
Such a dependence may occur:
- With shareholders who own at least 20% of the company’s shares;
- With the supervisory board or owners, with members of the management board or board of directors;
- With other enterprises belonging to the same concern or trading group;
- With enterprises in which this legal entity owns a fifth of the authorized capital or at least 20% of the votes.
For a company, an affiliate can be either a legal entity or an individual. It has the right to control or manage it: officials of various ranks, founders of the enterprise and large investors. In European legislation, only dependent companies and joint stock companies are referred to as such. In domestic – all participants in the relationship, including subsidiaries and individuals.
List of groups with an affiliated person in their composition
When transferring related parties for a commercial company or joint stock company, a group is often mentioned in which they may belong in parallel with an affiliate.
The main signs of the presence of such a person in a group:
- It solely controls and manages the entire company;
- Has a controlling interest in voting shares or the largest share in authorized capital;
- On his recommendation or direct order, key positions in the firm were appointed;
- It influences and approves candidates for the supervisory board;
- The enterprise indicates the powers of the parent company, which allow the cancellation or adoption of important decisions;
- The supervisory board and the management board of a commercial company consist of the same people.
All members of the group can intersect with each other, collaborate or carry out common transactions. A simple example formation of an affiliated group is joint stock company With subsidiaries: many founders are actively investing in the expansion and creation of branches, and developing regional areas. They are called “affiliate networks”.
Duties and responsibilities of affiliates
Interdependent legal entities and individuals have certain rights and restrictions. They are required to conduct transactions according to certain regulations, informing commercial companies about their affiliation. This adds post-accrual checks and post-profit tax payments.
The liability of affiliated persons may be:
- Legal for failure to comply with the requirements for conducting a transaction;
- Administrative for untimely or incomplete provision of information, a list of interdependent persons;
- Tax authorities for artificially lowering or inflating prices.
The law does not explicitly state the rights of affiliates. But they stem from their position in the group or with other participants in economic relations. They must conduct business in strict compliance with anti-corruption laws.
How and why to keep a list
For all joint-stock enterprises, maintaining a list containing information about affiliated persons is mandatory. It is updated every quarter based on recommendations for changes that have occurred. For the company, it is a documented basis for entering into transactions with interdependent companies.
- Download the LLC affiliate list form
The main positive aspects of maintaining a register:
- Ensures the safety of capital in the company by reducing the possibility of interference by outsiders in the operation of the enterprise;
- Reduces to a minimum the risk of recognizing the concluded agreement as invalid due to disapproval of the transaction by influential members of the supervisory board;
- Simplify the procedure for approving and concluding a transaction in which there is a certain interest.
Companies that publicly place shares on the stock market are required not only to maintain lists of affiliated persons, but also to periodically publish them on the Internet. They must be available to shareholders and other users for at least 3 years.
All lists must contain information:
- The date on which it is drawn up;
- Taxpayer identification number;
- All information about the company;
- Legal address;
- The percentage of shares or share in the authorized capital controlled by an affiliate.
IN big companies an authorized person may be appointed who will be responsible for storing and compiling the list: the chairman of the board or corporate secretary, the registrar of the joint-stock company.
The data is periodically studied by the antimonopoly service to identify cases of collusion and illegal transactions. Lists are often required by banks when considering a loan application, government agencies or own shareholders, tax authorities when checking reporting documentation.