Who are affiliates? Signs of affiliation of a company or organization under Russian law.

An affiliate is a person (individual or legal) capable of influencing the activities of individuals or legal entities, implementing entrepreneurial activity. In simple words, an affiliate (person or organization) is directly involved in control of the joint stock company.

The term “affiliated person” used in Russian legislation was borrowed from Anglo-American law. English verb affiliate denotes verbs: connect, attach, connect.

“Affiliating someone” means introducing an official of another into the management of one company.

In European law, affiliated companies are companies that are dependent on other companies. In Russian legislation, the word affiliated is applied to both dependent and dominant persons. The main feature of affiliation is the ability to influence business activities.

Signs of an affiliate

An important feature of an affiliate is the existence of a dependent relationship between an individual or legal entity and an affiliate of this individual or legal entity.

This dependence manifests itself in the following cases:

When an individual or legal entity owns a certain share of the authorized capital of a legal entity with voting rights in the management body
- if an individual or legal entity, due to a certain legal status (for example, the status of a general director or fund manager), has the right to issue binding instructions
- if there are certain family ties (kinship relationships) between individuals

Affiliate of a legal entity

Affiliates of legal entities persons may be:

Member of the supervisory board or board of directors, member of the collegial executive body
- individuals or legal entities having the right to dispose of more than 20% of total number votes translated into voting shares or components authorized capital contribution from the share of a legal entity
- a legal entity, if it is a member of a financial-industrial group (financial-industrial group).

“Affiliation procedure” is the process of one company entering the structure of another without changing the owner.

Affiliate of an individual

Affiliated individuals persons conducting business activities may be:

Persons who belong to the same group of persons as the individual
- a legal entity where an individual a person has the right to dispose of 20% of the total number of votes attached to voting shares or a contribution from the share of a legal entity that constitutes the authorized capital.

Joint-stock companies regularly provide information about their affiliates to the Federal Securities Commission. Also, any joint stock company is obliged to prepare lists of its affiliates for annual publication in the media. In addition, the lists must indicate the types and quantities of shares owned by affiliates.

The concept of “affiliates” is most often found in corporate reports and in chronicles of economic crimes. Business optimization - and withdrawal of assets, company development - and fictitious transactions... Who are affiliates? How to identify them in other companies and how to keep records in your own?

Affiliated persons are all persons who, due to their status, can influence management decisions in an organization or an individual entrepreneur. Influence means control over the development strategy of an enterprise, decision-making on mergers and acquisitions, major transactions (purchases or sales), management structure, etc.

The term “affiliation” comes from the English “affiliate” - “branch”, “branch”, “companion”, “joined”.

Legislation in Russia does not describe the affiliation of legal entities as clearly as in Western countries– for us this is a broader concept. The Tax Code of the Russian Federation (Articles 20; 105.1 and 105.2) has the concept of interdependent persons. The RSFSR Law of March 22, 1991, No. 948-1 (Article 4), which is still in force, briefly lists affiliated persons and indicates the main signs of affiliation.

Signs of an affiliate

• Has the right to vote at meetings of shareholders of an OJSC or members of an LLC.
• Owns a block of shares that allows you to influence the decisions of the meeting of shareholders, or shares in the authorized capital. For example, PJSC Gazprom owns 100% of the shares of Gazprom Transgaz Ufa LLC and, in accordance with this, exercises direct control, being an affiliate for its Ufa subsidiary.
• Has family ties with managers/members of the board of directors/owners of the organization. David Traktovenko owns the St. Petersburg Banking House holding, and his son Vyacheslav is the chairman of the board of directors of the Mix cafeteria chain and the Fitness Formula chain of fitness clubs. The first in relation to the second is an affiliate.
• Has the right to cancel or suspend decisions of the company’s executive bodies (if the affiliated person is a member of the board).

Who can be an affiliate

Legal entities can be affiliated with both organizations and individuals. Their list includes:

• head of the executive body of a legal entity. For example, Vagit Alekperov, who formally owns 2.5% of Lukoil shares, is a person exercising the powers of the sole executive body of this company, and therefore affiliated;
• member of the board of directors, supervisory board or other collegial body of a legal entity. Gregor Mowat or Timothy Demchenko do not have shares in Magnit, but in 2018 they are members of its board of directors, and, accordingly, are recognized as affiliates;
• owners of more than 20% of shares or shares in the authorized capital. The Rosneftegaz company owns 50% of the shares of Rosneft PJSC and on this basis is an affiliate;
• a dependent organization in which this legal entity owns more than 20% (for example, a subsidiary);
• firms belonging to the same group of persons (more on this in the next chapter) as this company.

Individuals may be affiliated:

• in organizations in which these individuals control more than 20% of shares in the authorized capital;
• from other companies belonging to the same group as the individual.

What is an affiliate group

This term is taken from Law No. 135-FZ “On the Protection of Competition”. It can mean several options. So, the group of affiliates is:

1 Several enterprises belonging to one financial and industrial group. For example, the Kachkanarsky GOK, part of the EVRAZ company, belongs to a group of affiliates with Evrazruda, Yuzhkuzbassugol, Nizhny Tagil Iron and Steel Works and a dozen other legal entities.

2 Direct relatives (spouses, parents/adoptive parents, children, brothers and sisters) and legal entities belonging to them. For example, the Safmar holding is owned by Sait-Salam and Said Gutserievs. This is the brother and son of the owner of the RussNeft company, Mikhail Gutseriev. All their legal entities are included in the group of affiliates.

3 Legal or natural person and organizations in which the mentioned persons have more than 50% of shares or shares in the authorized capital. Affiliated companies can be either LLC or OJSC; this is not distinguished by law.

4 Individuals and companies in which this person is the sole manager (for example, general director).

5 Individual or legal person and organizations to which these persons have the right (based on constituent documents) to give binding guidelines.

6 Several organizations whose board of directors includes more than 50% of the same people.

7 Individuals or legal entities and organizations whose general directors and/or more than 50% of the members of the board of directors are elected at the proposal of the mentioned persons. On this basis, for example, the Russian Helicopters company, the United Engine Corporation, the Moscow and Kazan helicopter plants and more than 10 legal entities belong to the same group.

The rights of affiliated persons are not established in any special way by law. They fully comply with the rights of other persons participating in the Russian economy. Dependent and controlling organizations and individuals have the right to conduct joint economic activity, coordinate their development strategies, but do not go beyond the limits of antimonopoly norms and the requirements of anti-corruption legislation.

But affiliates have more responsibilities than other market participants. They are not described in a specific legislative act, but they stem from the general meaning of the activities of a group of interconnected enterprises. These responsibilities are:

1 Inform counterparties about your affiliation with other persons in the event of interested party transactions (in this case, when one of the parties to the transaction is an affiliated or dependent person). Responsibility for violation of this requirement arises only in the case where the counterparty has proven that damage was caused to it by failure to provide information. The deal may be cancelled.

2 Inform about the emergence of affiliation in the event of acquiring more than 20% of shares or shares in the authorized capital of another person. This point only applies joint stock companies who are required to publish reports in accordance with the law. The affiliated company publishes information within 10 days in the official publisher of data on state registration of legal entities. The main difficulty is the control of subsidiaries and affiliates with regard to the sale and purchase of small blocks of shares by them (if this is permitted by the company’s Charter). If your subsidiary A acquires, say, a 10% stake in company B, and you already have a 10% stake in the same company B, then you, without knowing it, end up on the list of affiliates of the latter.

3 Maintain a list of affiliates. This obligation is more relevant for joint stock companies than for LLCs, but both should have a list. If a company places its shares on the stock exchange, it has an obligation to provide a list of affiliates to the Central Bank of the Russian Federation (as part of other reporting) and to the organizer of exchange trading. Also, these lists must be posted on the official websites of companies and be publicly available for at least 3 years from the date of posting and the same amount from the time of each update.

Who needs information about affiliates and why?

Information about the affiliation of companies and individuals must be available (see paragraph 3 of the next chapter) so that participants in transactions can check counterparties. The list of affiliated companies is necessary in order to control and report to government agencies on transactions with dependent parties, and not violate antitrust and anti-corruption laws.

It simplifies the procedure for approving interested party transactions (there is no need to obtain extracts from state registers to prove the interdependence of persons). This data is also provided to the LLC’s own shareholders/members. Another addressee is tax and other regulatory authorities during inspections (more about them in the chapter on the responsibility of affiliated persons).

Another important purpose of this information is internal control and protection against hostile takeovers. The simplest example is transactions to purchase stakes in competing companies. Let's say that JSC First, which has a 30% stake in JSC Second, decided to purchase another 21% and obtain a controlling stake in this company. “Second” is not eager to sell securities“First” and become completely dependent.

Then “First” applies the following scheme: on his son general director CJSC “First” is registered as LLC “Tretiy”, which comes out with an offer to buy a stake in the company “Second”. Since an individual cannot have affiliates, and an LLC has the right not to publish information about its affiliates, the interest of JSC First in the actions of LLC Tretiy can only be traced through the reporting of the company First.

Therefore, for the management of OJSC “Second”, when an offer to purchase shares is received, it is important to trace the possible affiliation of the potential buyer, assessing its likely connection with its main market competitors. And if this is not done, the shares will be bought by Tretiy LLC, and then sold to its affiliate, First CJSC, and a hostile takeover will occur.

How to properly maintain a list of affiliates

The procedure for accounting for affiliates for open and closed joint stock companies, as well as LLCs, is approximately the same.

1 The head of the legal entity issues an order in which he appoints the person responsible for maintaining the list. You can leave control to yourself, but it is more advisable to delegate this function to a lawyer.

2 The frequency of updating the list is set - once a year, every six months or every quarter, it all depends on the activity of the company and related parties in the stock market. This frequency is not specified by law.

3 The storage location of the list is established, as well as the period during which access to it is opened. If we're talking about about the LLC, the list can be kept by the general director and provided upon request. JSCs are required to post this data on their official website. Interested persons have the right to request the list for viewing: shareholders or members of an LLC, credit organizations.

4 The person authorized to sign the list is indicated.

The form of the list is chosen by the company itself. It must contain the following items:

• name of the company, its legal and postal addresses/full name and address for an individual;
• date of affiliation, event (purchase of shares, appointment to a position, etc.).

There may also be a column with the size of the share in the authorized capital owned by the affiliate and other information.

Here are some more examples:

What are the responsibilities of affiliates?

For violations in reporting affiliation, a person may incur several types of liability.

1 Responsibility for failure to provide information (including failure to provide it within the required time frame). If the company suffers damage due to the fault of an affiliate, it must be compensated by the culprit in full. Both the actual damage and lost profits are compensated.

2 Responsibility for the absence of a list of affiliated persons or its improper maintenance. Sanctions are provided for under Article 13.25 of the Code of Administrative Offenses of the Russian Federation: a fine for officials from 2500 to 5000 rubles, for a legal entity - from 200,000 to 300,000 rubles.

3 Responsibility for violation of requirements for interested party transactions. If information about a person's affiliation is not included in the appropriate list, is not published, or is deliberately withheld, this may be a reason for the cancellation of a transaction in which a special approval procedure has not been carried out.

4 Responsibility for violation of pricing. Sales of goods or services between related parties always attract close attention from tax authorities. An affiliate has every opportunity to influence the price to be sharply reduced or, conversely, increased compared to the market price. Therefore, such transactions are subject to additional checks, and if violations are detected, the affiliate is subject to fines proportional to the amounts underpaid/overpaid during the transaction.

Interdependent persons are checked using several methods:

• the prices used in the transaction are compared with market prices;
• the purchase price from an affiliate is compared with the price of subsequent sales to third-party consumers;
• the profitability usual for such transactions is compared with the profitability of a transaction between related parties;
• it is being examined whether part of the proceeds received from the transaction went to an affiliate;
• The reporting of both companies on expenses is assessed: whether one of them has excessive or, on the contrary, minimal expenses.

You can appeal the tax authorities’ decision to collect, but you need strong evidence. For example, in 2016, the Arbitration Court of the Volga District heard a case about allegedly reduced prices at which an enterprise sold housing previously purchased at a market price to members of its board of directors. The decision to sell was made by the same members of the collective executive body. However, the company presented an internal regulation according to which the price of the apartment was set at a fixed amount more than 15 years ago and has not changed since then. The court ruled in favor of the defendant; the tax inspector’s arguments were considered an interference with the legal commercial activities companies.

5 Responsibility for intentional withdrawal of assets from affiliated companies. Tax authorities identify such violations. The following are considered signs of withdrawal of assets from affiliates:

• a new legal entity was registered during a tax audit of an affiliated company;
• the new and old companies have the same actual addresses, telephone numbers, websites, and types of activities;
• the assets of the affiliated company decrease, and those of the new company grow in approximately the same proportion;
• employees of an affiliated company move to work for a new company;
• contracts executed for the previous company are reissued for the new one;
• using a new company as an intermediary in transactions with an affiliated company;
• transfer of brands, logos and other means of individualization from an affiliated company to a new company.

6 If there is one or more similar signs falling under clause 2 of Article 45 of the Tax Code of the Russian Federation, the tax authorities receive the right to collect from the new company tax debts attributed to the affiliated company.

Example :

In 2015 in Supreme Court The Russian Federation considered an appeal (No. 306-KG) in the case of collecting arrears from an interdependent person. The owner of the company registered a new legal entity on the eve of the tax audit. The name was the same as that of the person being checked, the type of activity was the same, the design of the official website was the same (the address differed only in the underscore), the employees were hastily transferred to a new company. The head of both companies was the same person. No affiliate information new company did not publish or officially inform contractors.

During the audit, it turned out that the proceeds from the sale of goods did not go to the original company, but to an intermediary, who turned out to be... a new company. There were no settlements with the affiliated company.

The court ruled that the activities of the new company were completely managed by the previous legal entity for the purpose of withdrawing assets and avoiding taxation. The original company was recognized as an affiliate, and both companies were recognized as interdependent.

Frequently Asked Questions

Affiliated and interdependent entities - what is the difference?

The interdependence of persons is a special case of affiliation. Used in the Tax Code of the Russian Federation to describe companies related by common owners/management, types of activities, etc. In the legislation, despite all the similarity of descriptions, there is some difference between affiliated and interdependent entities:

• An affiliate is a person who owns at least 20% of shares or shares in the authorized capital of another company; interdependent – ​​25%;
• companies in which the owners are not only parents, adoptive parents and children, but also guardians can be interdependent;
• A company can recognize itself as interdependent voluntarily, and affiliated only based on objective criteria.

I am the CEO of a company on the verge of bankruptcy. To pay off the next tax payment, he bought two cars from his company - at a price below the market, but they would have been sold at a bankruptcy auction for even less. Can the IRS cancel the deal or charge me the value of the cars because I am an affiliate?

Even before 2016, such a transaction could only be canceled as part of a bankruptcy procedure and only if the sale amount was significantly underestimated compared to the market price. However, as of November 30, 2016, amendments were made to Article 45 of the Tax Code, according to which tax liability Not only legal entities, but also individuals are responsible for the defaulting company. Accordingly, if taxes are not paid on time in the next tax period, your transaction may be considered an attempt to withdraw property for the benefit of an affiliate. And they will oblige you to reimburse market value cars - this amount will go towards paying taxes.

I individual entrepreneur, wife is the owner of a 25% stake large company. I won a commercial tender and became a supplier to my wife's company. Will the transactions fall under the relationship of interdependent persons, since I was not given any preferences?

Yes, such transactions come under the close attention of the tax authorities, since in this case the spouse’s company is considered an affiliate of the individual entrepreneur (belongs to the same group of persons). The transactions are considered commercial transactions between related parties. The circumstances of the tender, its conditions and the final price will be examined. The cost of the contract will be compared with similar ones on the market average. If the firm is in financial distress, any sales to a related party may be considered a potential divestment.

Conclusion

An affiliate is a person or organization that can legally influence the activities of other firms. Determine their development strategy, distribute dividends, and appoint management.

Affiliated persons can be general directors and members of boards of directors of companies, owners of blocks of shares of 20% or more, and subsidiaries. Another category of affiliation is belonging to the same group of persons. A group of affiliates refers to enterprises that are part of the same financial and industrial group; companies owned by relatives; legal entities managed by the same person; companies that are actually managed by one legal entity.

Companies with affiliated or dependent persons are required to keep records of them, updating the lists quarterly.

Information about affiliates is used by other companies to avoid breaking the law when executing interested party transactions. This information is also requested by the tax office when checking transactions between dependent and affiliated persons.

Failure to provide information about affiliation may be fraught with fines, as well as cancellation of the transaction with compensation for damage and lost profits. In the event of a deliberate transfer of assets from an affiliate to a dependent entity and an attempt at fictitious bankruptcy, the tax inspectorate has the right to collect arrears from the dependent company without acceptance (automatically without the consent of the person).

Video for dessert: A school of salmon crosses the road

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 countries: if abroad only controlled companies 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, 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. Subsidiary is always affiliated. In a broader interpretation (which is accepted in Russia), the parent organization is also an affiliated organization.

Although the subsidiary company 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 of final word belongs to parent company. Responsibility for an incorrect management decision lies with both parties.

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 manager 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. The scheme involving the general director 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 fashion in our country. 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 the minimum statutory amount (10 thousand rubles according to Russian legislation) – her risk is limited to this amount.

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