Affiliated Companies

DEFINITION of 'Affiliated Companies'

Companies that are less than 50% owned by a parent company; the parents are minority shareholders. More loosely, the term "affiliated companies" is sometimes used to refer to companies that are related to each other in some way. For example, Bank of America has numerous affiliated companies, including Banc of America, US Trust, Landsafe, Balboa and Merrill Lynch.

BREAKING DOWN 'Affiliated Companies'

By way of contrast, a subsidiary is more than 50% owned by its parent; the parent is a majority shareholder. Affiliates and subsidiaries are common ways for banks to enter foreign markets and be allowed to underwrite securities. Affiliates and subsidiaries are also used in foreign markets to give the impression that the company is not foreign-owned and thereby avoid any negative consequences that might be associated with consumers' perceptions of foreign ownership. For example, consumer goods company Unilever is a Dutch and British company; it calls its Indian subsidiary Hindustan Unilever.

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