Affiliates. The concept of "affiliated firm". Reasons for creation and various forms of leadership

According to the current law in our country, an affiliate is a status under which both legal entities and individuals can fall. The beginning is taken in English terminology. In translation " affiliate" has the same meaning as our verb "attach" or "bind". However, there is some difference between the European understanding of this term and the Russian one.

Legislation of the Russian Federation

Unlike the understanding accepted in Europe, according to Russian laws, affiliated companies are those organizations that have the ability to manage other legal entities, as well as subsidiaries. Often because of this, you can come across the term "interrelated" companies. It is also included in the Tax Code Art. 20 and Art. 105. There, the persons are not called affiliated, but rather interconnected.

A more complete breakdown of what affiliates are can be found in Law 948-1. Also, the concept has extensive coverage in the regulations governing the activities of joint-stock companies. Significant attention is paid to the rights of shareholders. An example is Federal Law 208 of December 26, 1995, which establishes a special procedure for transactions with affiliates, and also regulates the possibility of providing information about them. There are references to these subjects of legal relations in the legislation relating to the securities market (FZ-39 04/22/96) and municipal enterprises (FZ 161 11/14/2002).

You need to know that accounting also includes a breakdown of what affiliates mean. The definition was included in the Order of the Ministry of Finance No. 5n, which entered into force on January 13, 2000. All information about transactions carried out by persons related in this way is mandatory entered into the accounting records of the enterprise. This is done where affiliates have significant influence or control over the entity.

affiliated company the name of the firm that is controlled by a larger parent organization. The concept of “affiliated company” also has synonyms that are closer to our ears, for example, a branch or a subsidiary. The concept of affiliation is borrowed from foreign law and has been mentioned in Russian legislation since 1992.

By the way, the term "affiliated" is mentioned not only in relation to firms, but also in relation to individuals who are in official submission.

The concept of an affiliated company

In Russian law, the concept of “affiliated company” is interpreted somewhat differently than in foreign law: if abroad only controlled firms are called affiliated companies, then in domestic practice this term is also applicable to dominant organizations.

Such difficulties in interpretation are caused by the ambiguity of the concept itself. According to the most common interpretation, one can speak of affiliation when one of the companies has a minority interest (that is, less than 50% of the shares). A company with a majority of shares is a parent company, with a minority - a subsidiary. A subsidiary is always an affiliate. In a broader interpretation (which is accepted in Russia), the parent organization is also an affiliated organization.

The subsidiary company, although it carries out its own economic activity, is dependent on the parent company in terms of determining economic policy. As a rule, affiliated firms are a consequence of the development of the main organization. The goals of creating affiliated firms may be to expand the territorial representation and optimize the tax base.

Rights and obligations of an affiliated company

Parent and subsidiary organizations are connected with each other by common economic activity. In addition, the right of the final word belongs to the parent company. Responsibility for the wrong management decision lies with both parties.

At the same time, both organizations are not liable for each other's debts: if, for example, an affiliated controlled company went bankrupt, then the parent organization does not bear subsidiary liability for this.

Methods of managing an affiliated company

In total, there are three ways to manage a controlled company:

1. General director. The parent organization itself appoints a manager who makes decisions alone and can, at his own discretion, dispose of property, amounting in value to 25% of the total book value. At the same time, the head is fully responsible for the results of the affiliated company and their compliance with the forecasts of the managers of the parent organization. The scheme involving the CEO is the most common.

1. collegial body. The meeting of the board and the chairman of the board are appointed. This form has its advantages (for example, it is easier to solve complex problems with a collective mind), however, it is not very common in Russia: authoritarianism is in vogue in our country. The collegial body has an interesting feature: it should include approximately equal proportions of representatives of the parent organization and leading managers of the subsidiary firm.

1. Managing organization. Most often, the parent organization itself acts as a manager and makes all decisions for the "daughter". However, this form of leadership is fraught with danger: the parent firm bears liability for the losses of the subsidiary. Any subsidiary that owns at least one percent of the shares can file a claim with the management company. The way out, which is resorted to by many parent organizations: the creation of two companies - directly managing and the holding itself. The manager allocates the minimum authorized (10 thousand rubles under Russian law) - this amount of her risk is limited.

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Evgeny Malyar

# business vocabulary

Definition of the term

An affiliated company is a structure controlled by a larger or more influential legal entity. face.

Article navigation

• Is affiliation always prohibited?
• Affiliates: who are they?
• Legislation of the Russian Federation on the protection of competition
• Affiliated companies and the Tax Code of the Russian Federation
• What is an affiliate site?

The concept of affiliation is most often associated with criminal conspiracy. Under the guise of independent companies, business entities related to each other by common owners participate in auctions and transactions. The state seeks to eradicate such phenomena, but in order to achieve this, it is necessary to carefully study their nature and varieties.

From this article you can find out what the concept of "affiliation of a legal entity" means and in what cases such relations are considered illegal.

Is affiliation always prohibited?

The English word affiliated in translation means "attached", without any negative connotation. Everyone knows that large companies often practice opening their branches, subsidiaries and branches. They do so openly, and often use well-known logos and trademarks in the names of their associated businesses.

The meaning of the word itself does not contain a hint of a criminal conspiracy, which always constitutes the secret of its participants.

An example of dangerous stakeholder relationships is abuse in public procurement. It may seem that the participation of affiliates in the auction should be strictly prohibited, but this is not so. Their definition is given in Russian legal norms. According to the law 44-FZ (Article 39, Part 6), they are spouses, close relatives, including half-blooded ones, adoptive parents, adopted children, etc.

At the same time, there is no direct ban on the participation of persons affiliated with members of the commission in procurement for state orders. Another law, 135-FZ, indicates the inadmissibility of restricting or eliminating competition using mutual relations of interested parties. Similar provisions are present in 223-FZ.

In other words, affiliation as such does not legally mean the presence of criminal and corrupt intentions. However, she potentially creates conditions for them in cases where she is hidden.

Affiliates: who are they?

There are some differences in the Russian and English interpretations of the term "affiliate". To begin with, about how this word is spelled correctly: exclusively with two "F" and one "L" - philologists are unanimous in this. Now about what this means.

In foreign legal practice, affiliated companies are subsidiaries, that is, secondary and subordinate firms.

We consider this concept to be two-sided. Both affiliates and affiliates fall under its signs. The connection between them seems to be mutual, although in practice one of the subjects is always more important. Perhaps Russian law will eventually come to the need to distinguish between them.

An example of direct submission is any affiliate site. Wikipedia understands as such a twin resource containing the same information as the "mother" page. His policy, if it fluctuates, then only together with the "general line".

It is this aspect that makes it possible to understand the difference between interdependent and affiliated structures. In the domestic interpretation, these are, in simple terms, synonyms. Foreign lawyers see the difference between direct subordination and the ability of partners to influence each other.

When disclosing possible abuses, the main problem is how to prove the affiliation of an individual responsible for making a certain decision with an enterprise interested in it. If he is someone's relative or business partner, then the conclusions suggest themselves. It is more difficult when he is just a friend, a friend or a good acquaintance. Especially when few people know about it.

So who is objectively considered a natural or legal affiliate? What are the criteria by which it can be uniquely distinguished from all others?

Dependence manifests itself in several possible circumstances.

• The economic entity has complete control over the enterprise by reason of ownership or ownership.
• Owns a certain part of the authorized capital of the enterprise, giving the right to vote in making collective management decisions.
• Holds the position of CEO or other key position in the management of the company or has a legal status that gives the ability to manage. For a legal entity, this is expressed by the right to instructions that are mandatory for execution.
• The person is related to the owners of the company by kinship or family ties.
• Owns more than a fifth of the shares that make up the capital of the enterprise.
• Included with the management and management of the company in at least one group united by common business interests. These may be business clubs or other similar communities.

The main criterion for classifying an individual or legal entity as affiliated is its ability to influence the economic activity of the enterprise.

Legislation of the Russian Federation on the protection of competition

Taking into account the basis on which a person is recognized as affiliated, it should be noted the participation of third-party organizations in the management of Russian state-owned companies, including natural monopolies. There is nothing surprising in this fact. Such large business entities are necessarily surrounded by related parties that are financially involved in their activities.

Affiliation is due to the presence of a block of shares, which makes it possible to participate in the management of the corporation. Current legislation, subsequent amendments to the Civil Code of the Russian Federation and other regulatory documents oblige to provide lists of structures that have direct effective business ties with each strategically important corporation.

This information is public. It is a list of affiliated companies indicating the percentage of their share in the total capital.

In particular, anyone can find out that JSC (Joint Stock Company) Rosneft has the following share capital structure:

• 50.00000001% - JSC Rosneftegaz;
• 19.75% - BP Russian Investments Limited;
• 19.50% - QHG Oil Ventures Pte. Ltd.;
• 10.39% - JSC National Settlement Depository.

Ultimately, one can conclude that the listed four entities control Rosneft almost completely - the remaining shareholders account for an insignificant share of capital, measured in tenths of a percent.

Similar reports are provided by other state corporations.

A distinction should be made between data on affiliates and beneficiaries, who often use offshore schemes to hide their identities, that is, those who are beneficiaries.

First, the title documents indicate the official shareholders who own at least a fifth of the capital. At least a quarter, that is, 5% more (FZ-115), are the beneficiaries. What else is the difference? Nothing more. Both those and others receive income from this enterprise and are its share owners.

The activities of affiliates in the Russian Federation are regulated by sixteen regulations, including the Federal Law “On Competition”, “On Auditing”, the Presidential Decree, letters from the Ministry of Finance, etc. There are plans to adopt a special Federal Law specifically dedicated to affiliated entities.

Affiliated companies and the Tax Code of the Russian Federation

The term "affiliation" in the official legal documents of the Russian Federation is used as an auxiliary and is indicated in brackets. The Tax Code of the Russian Federation contains the basic concept of the interdependence of participants.

The attention paid to affiliates in the Tax Code is due to the fact that schemes with their participation are often developed in order to optimize the fiscal burden, in other words, avoid taxation when concluding transactions.

The use of special methods of tax control of companies provides for the mandatory disclosure of information about related business entities.

Signs of interdependence of legal entities and individuals and the degree of their participation are set out in chapter 14.1 and article 105.1 of the Tax Code of the Russian Federation and subsequent amendments to them. Unlike the Civil Code, these documents do not talk about 20, but about 25% of direct or indirect participation in the capital of an enterprise. It also indicates the percentage of representation in the collegial executive body or the board of directors of the organization - more than half.

Based on Art. 93 of the Federal Law "On JSC", joint-stock companies are obliged to keep records and reporting documentation of persons affiliated with them. The same requirement is enshrined in other legislative acts of the Russian Federation (decisions of the Federal Commission for the Securities Market, etc.).

Joint-stock companies must submit information about affiliated persons to the state registration authority every quarter. Lists of such are published in the public domain, indicating the changes within a period not exceeding three days after they occurred.

The 2018 list template includes the following information:

• full name of the affiliated person (for sole proprietorship - full name) with all the details;
• the date from which a legal or natural person can be recognized as affiliated;
• details of the document on which the fact of affiliation is based;
• share of participation of a person in the total capital of JSC;
• date of change of the list of affiliates and its description;
• signature of the head of the joint-stock company.

This document can be filled out in the form of an electronic questionnaire on the website of the Federal Securities Commission of the Russian Federation, from where the information enters the unified register.

If there are suspicions of tax evasion through affiliated persons, an audit of the enterprise should be carried out. The following facts can serve as signs of abuse:

• During the audit or immediately before it, the founders of the company registered a new legal entity.
• The actual addresses and contact details of both firms are the same.
• Since the beginning of the audit, the amount of the company's assets has sharply decreased.
• Supply contracts are urgently reissued to another company, rights and obligations are assigned in its favor.
• Employees move to another joint-stock company, the management structure of the enterprise and its staffing are changing.
• The proceeds are transferred to the bank details of the newly formed company.

Each of the listed signs is an indirect evidence of hidden affiliation (interdependence). Identification of an attempt to evade taxes becomes the basis for taking measures to recover arrears already from an affiliated entity (TC RF, clause 2, clause 2, article 45).

The liability of a limited liability company and persons affiliated with it for incomplete, distorted or untimely provision of the specified information provides for three main forms.

• Administrative - in case of formal violations (violation of deadlines, unintentional omissions, etc.).
• Tax - if the actions caused an unreasonable change in market prices. Consequence - additional taxes plus penalties with direct write-off from the account.
• Civil law - upon the occurrence of the consequences provided for by the Civil Code of the Russian Federation.

When conducting tenders for public procurement and in other similar circumstances, a letter of inquiry about the absence of affiliated persons among employees, managers or founders of counterparty firms allows speeding up the verification. This document is executed on letterhead and includes a link to the source (registry) to verify the veracity of the information.

What is an affiliate site?

Internet sites, like firms, can be affiliated. True, when creating affiliate resources, other tasks are set. The purpose of their organization is to maximize the flow of information. For this, twin sites are formed (they are also called clones), identical in content, and sometimes even similar in appearance.

An example from real life, not virtual life, helps explain this concept, when the same product is packaged by its seller in different packages. In this case, the probability that the buyer will choose this particular product increases significantly (by the number of fictitious varieties).

Search engines struggle with this phenomenon. Determining the dependence of Internet resources is quite simple: most often they have a common IP address, identical content, the same structure and layout.

Such a definition as “affiliated” came to Russia from the West. The literal translation means "to connect" or "to bind". Any person who is far from the business world will be misled by the list of hundreds and thousands of affiliates. Affiliates are persons who play an important role in today's business environment, so it's worth getting to know them better and understand how they differ, how they are regulated and what duties are imposed on them.

Affiliates and affiliated companies

Affiliates are organizations and people who have the ability to influence companies or individuals. If in domestic law the policy regarding affiliates is not so strict, then in the West they approach this issue much more carefully. In Russia, such persons are individuals, subsidiaries and organizations that are managers.

Affiliation is an influence on the work of the company, there must be organizational and property relations between the parties. Affiliation allows an organization to enter the structure of another company without any changes in management.

Types and signs

In the West, affiliation includes fewer rights and opportunities. In the domestic environment, additional dependent relationships appear if:

• the superior person has the right to stop the decisions of the subordinate persons;
• there is a share in the authorized capital;
• the person has the right to vote, which is exercised at each meeting;
• there is a relationship between board members.

Affiliates are not considered to be employees who can affect the company's production process through strikes, changes in requirements, and so on. And a relative of the owner of the company, who is entrusted with the management of a subsidiary, is considered an affiliate.

What is legal entity affiliation

Affiliates for a legal entity are:

• persons who own and dispose of more than 20% of the shares or capital of the company;
• identified as part of the group of persons to which the company is a member;
• management of a group of persons, which includes financial and industrial organizations;
• employees of management bodies, including directors.

For individual entrepreneurs, the list of affiliates is different:

• belonging to the same group of persons as entrepreneurs;
• firms where an individual entrepreneur has more than 20% of the shares or capital of the company.

What is a group of affiliates

Any legal entity has its own group of affiliated persons, which includes all close relatives (parents, spouse, brothers, sisters, children, grandchildren). Signs of the presence of an affiliated person in the group:

• there is a block of shares consisting of more than half of the available securities;
• there is a set of powers of the main company governing the adoption and cancellation of decisions;
• an individual has a direct influence on the selection of candidates for the Supervisory Board;
• an individual manager, the organization is managed by a sole executive body;
• the supervisory board and the board of directors are the same people;
• The recommendation or instruction was the reason for the position in the firm.

Read also: What is a white salary in simple words, the pros and cons of salary in an envelope

Members of a face group are allowed to cross paths and collaborate with each other. A common situation is the injection of funds from the parent company into a subsidiary in order to increase its growth rate. Opening branches, distribution in the regions and much more. All of these are affiliated networks.

Legal regulation

Affiliates of the Company are governed by the following articles of Russian legislation:

• article No. 105.1 of the Tax Code of the Russian Federation, which defines dependent persons and their influence on companies;
• , which determines the share of participation of persons in organizational matters of the company;
• regulating the issues of taxation;
• regulating the issues of conducting transactions;
• Federal Law No. 39, regulating the investment activities of the organization and the form of capital investments.

These articles of the law are subject to an affiliated person who has become such on any of the grounds (kinship, percentage of voting shares, status). Any dependent and managing person will have a set of relationships with each other.

If the rules of order were violated, then the following types of punishments follow:

1. Administrative responsibility. If the necessary information was provided in the wrong time frame, or the information is incomplete.
2. tax liability. Distributed in relation to interdependent persons. It is imposed in the event that persons have made unreasonable changes in the price. A special commission is invited to determine the presence of factors for changing the cost. If the deviation is more than 20%, then additional taxes are charged and the amount of the penalty is determined.
3. Civil liability. If the approved procedure for concluding transactions was violated.

Obligation to provide information about affiliates

Not only rights are imposed on the affiliated persons of the "LLC". Due to the presence of a special status, such persons have a number of responsibilities. First, they must inform the public about the voting shares they own. This is done with an indication of all the details, a prerequisite is the form of appeal - written.

A direct way to punish an organization that has not provided the public with information about the number of shares it has. But in relation to such legal entities, a number of sanctions are determined if the application was not written within the strictly allotted time.

The subjects of many concepts in the business language are familiar to us. Only for the time being, we are not aware that they are also denoted by this kind of term. An example of this is affiliated companies. Let's figure out what is hidden behind this phrase.

Definition of the term

A broader concept would be affiliates. This is the name of objects (people, organizations) that can significantly affect the activities of any company or individual entrepreneur. Hence affiliated companies - organizations, enterprises, firms, institutions that can influence the fate of an individual or legal entity engaged in entrepreneurship.

One more definition. An affiliated company is a firm that owns a stake in the main enterprise in an amount less than the controlling one. It can act as its branch, representative office, subsidiary. At the same time, the parent company takes part in the affairs of the affiliated company on the basis of an appropriate agreement. This kind of interdependent companies are created when expanding business to areas remote from the head office, when opening branches of transnational corporations.

Thus, an affiliated company is controlled by a larger, parent company. For the Russian language, the more common option is a branch, a subsidiary. The concept of "affiliation" came to us from foreign law in 1992.

I must say that Russian terminology is less strict than foreign terminology here. In a foreign business language, affiliated companies are precisely controlled ones. In Russia, their list is wider - these are both "daughters" and parent corporations. The concept itself is enshrined in the Tax Code of the Russian Federation:

• Art. twenty;
• p. 1, art. 105;
• p. 2, art. 105.

However, the legislation refers to affiliated companies as interdependent.

Now consider more specific examples concerning two groups of businessmen.

Affiliated persons

Consider who is an affiliated company, a person in relation to a legal entity:

IP affiliates

For individual entrepreneurs, the list consists of only two items. So, a group of affiliated companies, individuals of an individual entrepreneur:

• Firm, enterprise, 20% of the shares or authorized capital of which is owned by this individual entrepreneur.
• Objects belonging to the same group of persons as the entrepreneur.

Let's take a look at another concept that is often encountered in the explanation.

Group of people - what is it?

With regard to the list of affiliated companies, the term is explained in the Federal Law "On Protection of Competition".

The IP group includes:

• parents;
• children;
• spouse;
• sisters and brothers.

And here are the signs that someone is a member of the group of legal entities:

• Solely manages the legal entity.
• It is authorized to give instructions to the company, which the latter is obliged to fulfill.
• Manages more than 1/2 of the votes attributable to shares or authorized capital.
• It was at the suggestion of this person that the head of the legal entity was elected.
• The executive (management or board) and supervisory (council of the fund, directors) boards are the same persons.
• At the suggestion of this person, more than half of the members of the supervisory/executive board were elected.

Features of affiliated firms

Let's take a look at some of the most important features:

Providing information about affiliates

Russian antimonopoly legislation obliges PJSCs and CJSCs to provide lists of their affiliated companies. The report is kept both to state control bodies and to its own shareholders. Lists of affiliates must also be in accounting documents.

What is the value of such information? All kinds of mutual influence of individual entrepreneurs and legal entities can lead to collusion in the field of pricing, elimination of competitors by non-market methods. And ultimately - to the formation of monopolies. Such a process leads to the paralysis of individual Russian markets for goods or services. Therefore, in our country, the lists of affiliated persons are closely monitored by the Federal Antimonopoly Service.

Example corporation

And now a vivid example of the object of our conversation. These are affiliated companies of Philip Morris International (PMI). This is the name of the international tobacco corporation, leading in its industry. Its products are presented in more than 180 countries of the world. For 2015, she owned a share of 15.6% of the entire global cigarette market. In Russia - 28.4%.

In the Russian Federation, PMI is represented by three affiliated companies:

• "Philip Morris Sales and Marketing" (LLC).
• "Philip Morris Izhora" (CJSC). The factory is located in the Leningrad region.
• "Philip Morris Kuban" (PJSC). Located in Krasnodar.

Branches of these companies in more than 100 Russian cities. The factories employ about 4.5 thousand specialists.

Affiliates are objects that can affect the activities of the organization. But the concept of affiliated companies in the Russian Federation is broader - these are both parent and controlled companies.