Affiliate

DEFINITION of 'Affiliate'

A type of inter-company relationship in which one of the companies owns less than a majority of the other company's stock, or a type of inter-company relationship in which at least two different companies are subsidiaries of a larger company.

BREAKING DOWN 'Affiliate'

For example, let's say BIG Corp. owns 40% of MID Corp.'s common stock and 75% of TINY Corp. In this case, MID Corp. and BIG Corp. have an affiliate relationship, and TINY Corp. is BIG Corp.'s subsidiary.

However, note that for the purposes of filing consolidated tax returns, IRS regulations state that a parent company must possess at least 80% of a company's voting stock in order to be considered affiliated.

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