Associated enterprises

An enterprise that participates in the administration, control, or capital of another firm, whether directly or indirectly, or via one or more intermediaries, is referred to as an "associated enterprise" with reference to that other enterprise. Therefore, another enterprise will be regarded as an affiliated enterprise of the contributing enterprise if an entity engages in its management, capital, or control of it.

The Act mentions involvement that can be done directly, indirectly, or through one or more middlemen. Additionally, two businesses will be referred to as related businesses if the same individuals undertake the management, capital, or control tasks of one business and another business, respectively.

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Two businesses are considered to be associated enterprises, If, at any point in the prior year,

(a) one company owns, directly or indirectly, securities in the other company representing at least 26% of its voting power; or

(b) any company or person that directly or indirectly owns shares in each of these companies that represent at least 26% of the voting power in each of such enterprises; or

(c) a loan made by one company to another company represents at least 51% of the other company's total assets as measured by book value; alternatively

(d) 10% or more of the total borrowings of one business are guaranteed by the other business; or

(e) if the other company appoints more than half of the board of directors, governing board members, one or more executive directors, or executive participants of the governing board of one company; or

(f) either one or several of the executive directors or participants of the governing board, or more than half of the directors or participants of the governing board of each of the two firms, have been appointed by the same person or individuals; or

(g) the production of goods or the operation of a business by one company depends entirely on the use of know-how, patents, copyrights, trade names, licences, franchises, or any other commercial rights of a like nature, or any data, documentation, drawing, or specification referring to any patent, invention, model, design, secret formula, or process of which the other company is the owner or with respect to which the other company has any rights.

(h) 90% or more of the raw materials and consumables needed for the production or processing of goods or articles by one enterprise are supplied by another enterprise, or by individuals that the other enterprise specifies, and the prices and other terms relating to the supply are inspired by such other enterprise.

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