In civil law and real life A relatively new phenomenon is affiliates. It is usually understood that these are private citizens or firms, companies (legal entities) that can influence individuals or legal entities engaged in commercial activities. Examples and a list of such persons are in this article.
Based on keyword“affiliated”, which in English translates as “joining a larger, significant”, so each person can only be affiliated in relation to another specific person. Moreover, both parties to such relations can be individuals and companies. Therefore in general case there are:
- affiliated citizens (including individual entrepreneurs);
- affiliated companies or individual entrepreneurs.
A party may be given such a characteristic if it can and accordingly has a strong influence on commercial activities other side:
- economic;
- entrepreneurial;
- economic.
Thus, if a citizen, entrepreneur or company can influence another party running a different business, this is an example of affiliation. This refers specifically to the influence on the adoption of the most important commercial decisions:
- about sales;
- o income redistribution;
- about planning expenses;
- on the appointment of employees to key positions;
- about interaction with suppliers;
- about marketing policy and many others.
For legal entities
The specific list of such persons may vary depending on the characteristics of the organization of enterprise management and the form of its ownership. IN general view The company's affiliates include the following:
- Parties who are members of the company's management body of a collegial (collective) nature. Usually we are talking about the supervisory board, as well as the board of directors of a public joint stock company. That is, any members of such structures directly influence the management of the company and participate in making the most important decisions - on reorganization, change economic policy, pricing, personnel issues and much more.
- Members of the executive body, including if it is represented by one employee – i.e. We are talking about one-man rule.
- A company in which the company in question has at least 20% of shares or a share in the capital of at least 20%. In this case, we are talking about mutual affiliation, since both parties mutually influence each other and have corresponding business interests.
- Management of financial and industrial groups. For example, often banks and manufacturing companies unite into such integrated groups for more effective interaction and faster decision-making. Of course, exactly senior management directly participates in the development of these decisions and obliges both parties to act in accordance with them.
- Persons who represent the executive bodies of such financial and industrial groups in one person.
Approaches to defining criteria for such individuals are still being developed. In general, they can be formulated as follows:
- the ability to control half of the votes (or more) when owning the corresponding number of shares;
- half share ownership authorized capital or b O more quantity;
- company management (sole);
- management of the company (collegial - for example, through the Board of Directors).
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For citizens
An individual citizen can also carry out commercial activities, and recently he can be registered not only as individual entrepreneur, not as self-employed (i.e. he is looking for a job himself, and there are no other employees on staff).
Its affiliates are:
- private citizens belonging to the same group as the entrepreneur himself;
- a company in which this citizen has more than 20% of shares (voting) and/or more than 20% of the authorized capital.
Rights and Responsibilities
Clear rights for such persons are not spelled out, since there is no need to reflect this aspect in the legislation. In practice, their rights are expressed in the ability to influence key decisions. And among the responsibilities, the main one is that the company itself must conduct and provide full list their affiliates to the territorial branch of the FAS. A specific form of notification has been developed by the same department, but it is advisory and not mandatory.
The affiliates themselves have the obligation to notify the company in writing with information about the shares that they own. In this case, such notification is received once within 10 calendar days from the date on which the share was officially purchased.
Maintaining a list of participants
Each company is obliged to maintain a list of both all its participants and specifically affiliated persons, as well as provide this data to the inspection authorities upon request. Usually a special employee is appointed who is responsible for compiling and updating this information. His responsibilities include:
- Constantly updating the list with new information in compliance with the deadlines for updating it;
- storage of all related documents (certificates of purchase of shares, contracts and others);
- interaction with interested parties and inspectors: provision of requested information or reasoned refusal with a written explanation of the reasons;
- other duties as specified in the job description.
Usually every company maintains a complete, i.e. a detailed list that includes all members of the company. At the choice of the company itself, it is allowed to maintain selective lists, one of which is affiliated persons. However, the classification of parties is usually given in accordance with their shares in the authorized capital.
Typically, the list of persons is listed in a document with an appropriate title, which includes the following sections:
- Full list of participants current as of the reporting date.
- Data on the share of each participant.
- A magazine where all these persons are listed by name (in alphabetical or other order).
- A journal that reflects the movement of all incoming correspondence.
- Registered persons (legal entities and individuals, including pledge holders).
- Other journals necessary for recording document flow.
Liability of affiliates
It is interesting that the very qualification of activity as affiliation, i.e. the actual influence on the adoption of important economic relations is not given either in the Tax or Civil Codes. Therefore, strictly speaking, neither cooperation of activities nor close interaction are illegal acts, since the element of mutual participation itself cannot be considered illegal.
Thus, only the Federal Law “On Protection of Competition” can be taken into account, but only general information on illegal methods of combating economic competition:
- abuse of leading economic position;
- illegal restrictions on competition, etc.
Therefore, we can say that even at the legislative level, strict criteria for an affiliate and its activities as such have not been developed. Therefore, one must be guided primarily judicial practice on similar matters.
The institution of affiliated persons is a fairly new phenomenon, both theoretically and practically. The article reveals the definition itself and the scope of its application.
Attention will also be paid to the accounting rules of this category, responsibility for failure to comply with them, as well as the relationship between the main and subsidiaries.
Affiliates. Concept and types
The phrase itself arose in the Russian language in the 90s. The concept of an affiliate was first mentioned in 1992 in the annex to the Decree of the President of the Russian Federation. It talked about investment funds. In a broad sense, affiliation implies closeness to something, because English verb to affiliate, from which the word comes, is used in the meaning “to join, connect.”
This term can also be interpreted as joining a membership. Affiliates, to one degree or another, influence each other, be it business or economic activity. In total they represent a specific group.
This term found legislative reflection in 1995, and the official definition appeared only in 1998 as a result of amendments to the Competition Law. Affiliates are citizens or entrepreneurs who can influence the business activities of other people or companies. There are some aspects in which an entity is considered to have control over an organization. Affiliated persons of OJSC are citizens or entrepreneurs:
- Having more than 20% of voting shares. At the same time, affiliates of the Joint Stock Company have the opportunity to influence the decision-making process in this organization.
- Having more than 50% of voting shares.
It is believed that an individual can have a significant impact on an organization, having the ability to participate in decision making, even without controlling its activities.
Legislative framework
Article 4 of the Federal Law, as stated above, defines what affiliates are. In addition, the normative act also deciphers the possible composition of this category. The list of affiliates primarily includes entities closely related to the control mechanism.
These may include holders of a large block of voting shares, direct participants in the enterprise management process. Affiliation implies, as a rule, the possibility of unilateral influence of one party economically economic activity to another.
It should be emphasized that this refers to relationships that are not of a property nature, but of a managerial nature. Property dependence can, rather, be defined as a consequence, and not at all a condition for the emergence of dependence on control. Not the least role in this issue relationships of a related nature play a role.
Classification
According to the Competition Law, affiliates may be:
1. Enterprises:
One of the owners of this legal entity;
Member of any management body (for example, board of directors);
Persons who have at their disposal at least 20% of the total number of decisive shares;
An organization in which the subject in question acquires the right to control the number of votes exceeding 20% of the total;
The party exercising the powers of the sole body.
2. An individual conducting business activities:
Citizens who belong to the same group as the subject;
An organization in which the entrepreneur in question has the right to control 20% or more of the total number of votes expressed by decisive shares, contributions, shares in the authorized capital.
3. Entrepreneurs participating in financial and industrial groups:
Members of supervisory bodies or boards of directors;
Collegial management structures;
Entities that exercise the powers of individual divisions of the group.
Scope of this category
The category of affiliated persons can often be found not only in the theoretical, but also in the practical part of the activities of entrepreneurs. Meanwhile, as practice shows, many do not have a clear idea of this category. This, in turn, often becomes the cause of quite serious errors in the process of economic activity of the subject. The term "affiliates" is primarily associated with corporate law. Most often it is used for:
- the process of identifying persons who obviously have an interest in the actions of the company, which presumably will lead to the conclusion of a transaction;
- identification of directors who have the right to cast a decisive vote in relation to a transaction of interest to them, which an open joint-stock company with a number of participants of over a thousand intends to carry out;
- determining the list of entities about which the business company must be provided with information;
- the process of identifying persons, the provision of information about whom the joint-stock company is obliged to provide;
- determining the list of participants who have overcome the thirty percent mark during the acquisition of shares of the OJSC; in this case, certain procedures must be followed, the course of which is regulated by law.
Relationships between the parent company and its subsidiary
How do affiliates interact? An example of such relationships can be considered by taking the dominant (main) society and the subsidiary (dependent on the main one). When creating last company receives ample opportunities to increase the volume of its activities. The main difference between the main company and its branches is legal independence.
Responsibilities
Affiliates have more than just rights and opportunities. By virtue of their status, they have a number of responsibilities. First of all, they are charged with informing society about the shares they own. This must be done in in writing and indicating the agreed details (exact quantity, types of papers, etc.).
Information must be received within a certain period from the moment of acquisition of shares. Despite the fact that there is no provision for the liability of such persons before the law in connection with failure to provide the necessary information within the allotted time, certain sanctions against them still exist.
If, due to the fault of affiliated persons, the joint-stock company suffered losses of any nature (for example, property damage), then the punishment will be compensation for the entire amount of damage caused (in accordance with Article 15 of the Civil Code of the Russian Federation).
Accounting responsibilities of enterprises
The company is required to maintain a list of affiliates. List in mandatory submitted to the relevant authorities responsible for regulating this market. Antimonopoly legislation imposes a fine for violation existing rules providing necessary information. The same rules apply to the list of LLC affiliates. Lists should be publicly posted on the Internet.
Such requirements are quite understandable. Such information is in great demand within the framework of a certain procedure for concluding transactions in which affiliates participate. These include, in particular, interested party agreements. A logical question arises: “Is a closed joint stock company obliged to submit information about affiliated persons?”
After all, it, as a rule, does not engage in public placement of securities. Accordingly, the rule concerning open joint-stock companies does not fully apply to closed joint-stock companies. Nevertheless, his responsibilities include maintaining records of the subjects in question, albeit in a free form. If a closed joint stock company carries out a public placement of bonds, then it is also obliged to publish the register of affiliated persons on its website on the Internet.
Accounting procedure
If we take any example of a list of affiliates, the list will contain the following information:
1. Company name (short and full), postal address.
2. Last name and initials of the subject, residential address (for individuals);
3. Grounds for being an influential party, the date of occurrence of these grounds.
Responsibility
There are different types penalties for violating the prescribed order.
1. Administrative responsibility. It occurs if the information is not provided in full or in violation of the deadlines specified in the legislation.
2. Tax liability. It occurs in relation to interdependent persons and concerns unreasonable price adjustments that run counter to the real situation on the market. If, based on the results of the audit, it turns out that the value of the completed transaction deviates from the existing one by trading platform more than 20%, this fact gives the controlling authority the right to assess additional taxes and penalties. In this case, collection is carried out without acceptance.
3. Violation of the procedure for carrying out transactions in which affiliates are participants may also be subject to civil liability.
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 a broad sense, affiliation is being close to something because English version This word “to affiliate” is translated as “to connect, 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 are individual entrepreneurs or citizens who influence business activities, 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).
Directly, Article 4 of the Federal Law of the Russian Federation determines 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 (a prime example is the board of directors), persons owning at least 20% of the 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 operation.
- 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 affiliated persons. 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. Scroll 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.
According to the current law in our country, an affiliate is a status that can include both legal entities and individuals. It starts in English terminology. In translation " affiliate" has the same meaning as our verb "to attach" or "to bind." However, there is some difference between the European understanding of this term and the Russian one.
Legislation of the Russian Federation
In contrast to 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. Because of this, you often see the term “interconnected” companies. It is also included in the Tax Code Art. 20 and art. 105. There the persons are called not affiliated, but interconnected.
A more complete explanation of what affiliates are can be found in Law 948-1. The concept is also widely covered in 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 carrying out transactions with affiliated persons, 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 (Federal Law-39 04/22/96) and municipal enterprises(Federal Law 161 November 14, 2002).
You need to know that accounting also includes deciphering what affiliates mean. The definition was included in Order No. 5n of the Ministry of Finance, 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 in cases where affiliated organizations have significant influence or control over the enterprise.
