Affiliate

Definition of Affiliate

An affiliate is a person, organization, or entity that is associated or connected with another organization, usually through some form of ownership, control, or contractual relationship.

The term "affiliate" is commonly used in various contexts, such as business partnerships, marketing programs, and financial arrangements.

What is an Affiliate?

An affiliate typically refers to a company that is related to another company through ownership or control.

Types of Affiliate

The degree of affiliation can vary, and it may be classified into different types based on the level of ownership or influence:

Majority-Owned Affiliate

When one company owns more than 50% of another company's voting shares, the latter is considered a majority-owned affiliate of the former. The majority owner has significant control over the affiliate's operations and financial decisions.

Minority-Owned Affiliate

In this case, one company owns less than 50% but still has a substantial ownership stake in another company. Although the majority owner holds control, the minority owner may have some influence over the affiliate's activities.

Joint Venture

An affiliate can also be created through a joint venture, where two or more companies collaborate to undertake a specific project or business endeavor. Each company may have an equal or varying ownership share in the joint venture.

Subsidiary

A subsidiary is a company that is entirely controlled by another company, known as the parent company. The subsidiary is legally separate but operates under the parent's authority and direction.