Not an affiliate. It is proposed to clarify the legislative definition of affiliated persons

The concept of “affiliated companies” was borrowed by the Russian legislator from foreign law (mainly the Anglo-Saxon system) and first appeared in documents published in 1992. At the same time, the concept was used in a slightly different meaning than it is used abroad. According to Federal Law 948-1, which regulates issues of restricting monopolistic activities, affiliates are organizations or individuals that are capable of influencing the activities of third parties through their actions or will. commercial enterprises or individual entrepreneurs.

Thus, both dominant and dependent persons fall under the definition. The foreign interpretation of the term looks like this: persons dependent on the will and actions of other persons. The institution of affiliated persons was found in legislative documents regulating the period of active privatization in the nineties of the last century. Subsequently, these documents lost force, however, the use of the term affiliated companies was widely developed in the legislation on joint-stock companies, as well as on limited and additional liability companies.

These documents regulate a special procedure for performing certain actions in order to avoid violating the interests of the owners of the capital of such companies. Thus, there are restrictions on the execution of certain transactions in which affiliates are parties, the alienation or acquisition of shares in the authorized capital, attention is paid to the procedure for disclosing information about the composition of affiliated persons. What characteristics do affiliated companies and persons have? These include members of the highest society (Board of Directors, other collegial body), as well as the director of the company (his sole affiliates are companies that are part of the same group; if the first two signs are combined - if the company is part of a certain group of enterprises, Members of the management bodies and directors of the remaining companies of the group will be affiliated with this person; legal or having the authority to dispose of twenty or more percent of the stake in this person, or the same number of voting shares - also affiliated. On the contrary, that legal entity will also be affiliated , in which this company has a 20 percent stake in the authorized capital or voting shares in the same amount.Special attention is paid to such an informal feature as the ability to exert influence in ways other than administrative and corporate - this occurs in the case when some affiliated companies or individuals, while hiding their own participation in the structure of a certain entity, actually perform volitional functions in it - we are talking about “protection protection” and other external pressure. Back in 2000, legislators attempted to publish a separate document dedicated to affiliated persons (at the level federal law), however, the draft was never adopted in the second reading in the State Duma.

Today, the concept of affiliated companies is successfully used when conducting government and other procurements on the basis of competitive procedures of a public nature, when procurement documentation contains requirements for the inadmissibility of submitting proposals for participation in procurement by affiliated persons. This avoids collusion and promotes transparency and fair competition.

IN Russian law the term “affiliation” appeared in 1995. Affiliates are persons related in property terms and capable of influencing each other. These include members of the board of directors, supervisory board or other management body.

A necessary attribute of an affiliate is the dependency relationship between the legal entity and the affiliate. They can be property, contractual or related.

Russian legislation prohibits the transfer of procurement documentation to affiliates, which ensures transparency of procurement and fair competition.

Sometimes affiliates may be persons who influence the actions of the company without formally and legally having such authority.

Concept and characteristics of affiliated companies

The term “affiliated companies” was borrowed from foreign law and has become widespread since 1992. But in Russia this concept is used somewhat differently from Western meaning. According to Federal Law 948-1, a key sign of affiliation is the ability to influence the economic activities of third-party companies and individual entrepreneurs.

If in Europe affiliated companies are firms dependent on others, then in Russian legislation the term applies to both dependent and dominant persons.

Difficulties in interpreting affiliated companies arise from the broad interpretation of the concept. In a narrow sense, an affiliate is a company in which another has an interest (it owns less than 50% of the shares). Affiliated companies are related to each other in property and organizational terms.

In a narrow interpretation, an affiliate is a company in which another has a minority interest, i.e. it owns less than 50% of voting shares. A company that has more than 50% of the shares of another is called the parent. A minority share company is a subsidiary or subsidiary company. A subsidiary company is always an affiliate, but the term subsidiary is preferred when there is outside control of a majority of the shares of the company in question.

TNCs in regions remote from the parent company often resort to creating affiliated companies.

The company can act as a parent company, while it participates in managing the affairs of an affiliate on the basis of an agreement. Therefore, the branch and regional networks are called affiliate networks.

An affiliated company, although it carries out its own economic activity, but in fact completely supports the policy of the parent company and depends on its decisions. Affiliation is often used to artificially split a business in order to optimize the tax base.

This 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 perform important role in modern business sphere, therefore it is worth getting to know them more closely and understanding how they differ, how they are regulated and what responsibilities are imposed on them.

Affiliates and affiliated companies

Affiliates are organizations and people who have the ability to influence companies or individual entrepreneurs. If in domestic law the policy regarding affiliated persons 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 influencing the work of a 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:

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

Employees who can influence manufacturing process companies through strikes, changing demands, and so on. A relative of the company owner who is entrusted with the management of the subsidiary is considered an affiliate.

What is affiliation of a legal entity

Affiliated persons for a legal entity are:

• persons who own and control more than 20% of the shares or capital of the company;
• identified as part of a group of persons of which the company belongs;
• 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:

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

What is an affiliate group

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 affiliate 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 direct influence on the selection of candidates for the supervisory board;
• an individual is a 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 became the reason for determining the position in the company.

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Members of a group of persons are allowed to intersect and cooperate with each other. A common situation is to inject funds from a parent company into a subsidiary in order to increase its growth rate. Opening branches, distribution in regions and much more. These are all affiliate networks.

Legal regulation

Affiliates of the company are regulated by the following articles of Russian legislation:

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

An affiliated person who has become such on any of the grounds (kinship, percentage of voting shares, status) is subject to these articles of the law. Any dependent and controlling 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. Applies to interdependent persons. Imposed if persons have made unreasonable changes in 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 assessed and the amount of penalties is determined.
3. Civil liability. If the approved procedure for concluding transactions has been violated.

Obligation to provide information about affiliates

Affiliates of LLC are subject to more than just rights. Due to their special status, such persons have a number of responsibilities. First, they must inform the public about the voting shares that belong to them. This is done with all the details, prerequisite is the form of address – written.

A direct method of punishing an organization that did not provide the public with information about the number of shares held. But regarding such legal entities a number of sanctions are determined if the application was not written within the strictly allotted period.

The term “affiliates” has begun to actively spread in our country. This word is used in vocabulary in English. Its appearance in Russia is associated with a continuous process of development economic relations in the international arena, that is, enterprises are entering into more and more contracts and agreements with foreign partners.

So, affiliates is a concept that implies specific list legal and individuals, capable of having a certain impact on other economic entities leading entrepreneurial activity. The current legislation states that when these persons purchase shares of a company, they are required to provide their JSC with a written notification within 10 days indicating their quantity. Otherwise, affiliated persons must transfer the amount to the company Money in the amount of compensatory damage. The enterprise must keep records of such owners and provide reports to the established inspection authorities.

There is a certain list of affiliated persons of a legal organization. First of all, their number includes members of the management team, as well as employees temporarily replacing the manager. The list of such persons automatically includes owners of shares whose specific share exceeds 20% of the total, as well as citizens who have invested in the authorized capital of the enterprise. It is worth highlighting separately those legal companies that are part of the financial and industrial group. In this case, an affiliate will be considered a participant in a management unit, for example, a board of directors or an executive body.

The concept of “affiliates” is convenient because it has a specific property. That is, it not only represents a group of people, but also automatically assigns them certain powers. The list of such persons can include those citizens to whose group they belong as well as the legal organization in which individual entrepreneur has a preemptive right to dispose of shares in an amount exceeding 20%.

I would like to note that the presence of an affiliated connection between subjects presupposes the presence of personal dependence in the sphere, and the property relationship of persons acts as a consequence of personal relationships. Modern legislation has clearly set out the requirements that affiliates must comply with. The problem is that failure to comply with established duties is not punishable by law, that is, there is practically no liability. This means that individuals can use their own discretion to decide whether to comply with the rules recommended by the government, without any fear of committing an unlawful act.

Compiling lists of affiliated persons is considered a necessary and even forced measure. This is explained by the fact that the list is considered a documentary substantiation of the powers of the person making transactions with counterparties. And if the documentation is drawn up correctly, then the degree of trust on the part of other business entities is much higher.

Based on all of the above, we can conclude that the introduction of the term “affiliated” is more than rational. After all, it fully reveals the meaning of the relationship between persons connected by affiliate relations. In addition, thanks to legislative criteria, it is possible to identify a certain list of persons and positions that are automatically included in the list.

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

By the way, the term “affiliated” is mentioned not only in relation to companies, but also in relation to individuals who are in official subordination.

The concept of an affiliated company

In Russian law, the concept of “affiliated company” is interpreted somewhat differently than in foreign law: while abroad only controlled companies are called affiliated companies, 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, we can talk about affiliation when one of the companies has a minority interest (that is, less than 50% of the shares). The company with a majority of shares is the parent, and the company with a minority is the subsidiary. A subsidiary is always an affiliate. In a broader interpretation (which is accepted in Russia), the parent organization is also an affiliated organization.

Although the subsidiary carries out its own economic activities, it 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 companies may be to expand territorial representation and optimize the tax base.

Rights and obligations of an affiliated company

The parent and subsidiary organizations are related to each other by a common economic activity. In addition, the right final words owned by the parent company. Responsibility for wrong management decision lies on both sides.

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

Ways to run an affiliated company

There are three different ways to manage a controlled company:

1. General director. The parent organization itself appoints a manager who makes decisions alone and can, at its discretion, dispose of property amounting to 25% of the total book value. In this case, the leader bears full responsibility for the results of the activities of the affiliated company and their compliance with the forecasts of the managers of the parent organization. Scheme involving general director 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 tasks collective mind), however, is not very common in Russia: in our country authoritarianism is in fashion. The collegial body has interesting feature: it should include approximately equal proportions of representatives of the parent organization and leading managers of the subsidiary company.

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 company carries liability for losses of the subsidiary. Any subsidiary that owns at least one percent of the shares can make claims to the management company. The solution that many parent organizations resort to is the creation of two companies - the direct management company and the holding company itself. The manager is allocated a minimum statutory amount (10 thousand rubles according to Russian legislation) - her risk is limited to this amount.

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