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Subsidiary vs. Associate — What's the Difference?

By Tayyaba Rehman — Published on November 25, 2023
A Subsidiary is a company controlled by a parent company, while an Associate is a company significantly influenced by another company, typically through ownership.
Subsidiary vs. Associate — What's the Difference?

Difference Between Subsidiary and Associate

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Key Differences

A Subsidiary company signifies a business entity that is fully or majorly owned and controlled by another company, referred to as the parent company. On the opposite spectrum, an Associate company implies a firm where another company holds a significant but not a majority interest, often reflected through a stake of 20% to 50%. These definitions underscore the nature of the control and influence that one company exerts over the other.
Tayyaba Rehman
Nov 25, 2023
The primary distinction between a Subsidiary and an Associate is indeed the degree of control exercised by the owning company. A parent company with a Subsidiary has the majority stake, allowing it to make unilateral decisions, while in the Associate relationship, the influence is substantial but not overarching, due to a lesser ownership stake, thereby providing a collaborative decision-making scenario.
Tayyaba Rehman
Nov 25, 2023
In terms of financial reporting, Subsidiaries’ finances are typically fully consolidated with the parent company because the parent company has comprehensive control. Contrastingly, in the context of Associates, the investing company often uses the equity method for reporting financial interest since it doesn’t have unilateral decision-making power, reflecting distinct financial management and reporting practices between Subsidiary and Associate entities.
Tayyaba Rehman
Nov 25, 2023
Moreover, Subsidiaries can be created when a company purchases a majority stake in an existing company or develops a new entity. Associates, however, are recognized when an investing company purchases a significant, but non-majority stake, showcasing differing formation or identification paths for Subsidiaries and Associates.
Tayyaba Rehman
Nov 25, 2023
From a legal perspective, Subsidiaries can act independently, but their actions and decisions are usually in alignment with the parent company due to the ownership and control held. For Associates, the investing company cannot dictate actions and decisions unilaterally, and thus, the Associate company retains higher autonomy in its operations, differentiating the legal and operational autonomy between Subsidiaries and Associates.
Tayyaba Rehman
Nov 25, 2023
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Comparison Chart

Ownership

Majority (usually 50%+) ownership by parent company
20%-50% ownership without majority control
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Nov 25, 2023

Control

Has direct control
Has significant influence but not direct control
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Nov 25, 2023

Financial Reporting

Fully consolidated with parent company
Reported using equity method
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Nov 25, 2023

Decision-making

Largely unilateral by parent company
Collaborative, influenced by owning company
Tayyaba Rehman
Nov 25, 2023

Autonomy

Limited due to parent company control
Relatively higher due to lack of unilateral control
Tayyaba Rehman
Nov 25, 2023

Compare with Definitions

Subsidiary

A Subsidiary is a company majority-owned by another entity.
The tech giant owns a Subsidiary specializing in AI research.
Tayyaba Rehman
Oct 09, 2023

Associate

An Associate company is significantly, but not majority, influenced by an investor.
The firm became an Associate after a 30% stock purchase by the investor.
Tayyaba Rehman
Oct 09, 2023

Subsidiary

It denotes a business fully consolidated with its parent company.
The parent company included its Subsidiary in the annual report.
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Oct 09, 2023

Associate

It implies a company having substantial investment but without controlling stake.
The company, as an Associate, collaborated on projects without losing autonomy.
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Oct 09, 2023

Subsidiary

Subsidiaries operate as distinct legal entities under parent company control.
The Subsidiary launched a new product line with approval from the parent company.
Tayyaba Rehman
Oct 09, 2023

Associate

Associates maintain higher autonomy compared to Subsidiaries due to ownership structure.
The Associate embarked on distinct projects while sharing profits with its investor.
Tayyaba Rehman
Oct 09, 2023

Subsidiary

It refers to a firm whose decisions are significantly influenced by its owner.
The Subsidiary relocated its headquarters as per parent company directives.
Tayyaba Rehman
Oct 09, 2023

Associate

An Associate typically utilizes collaborative decision-making, respecting the investor's influence.
The Associate sought investor input before initiating a merger.
Tayyaba Rehman
Oct 09, 2023

Subsidiary

Subsidiaries can act autonomously but within the purview of the parent company.
The Subsidiary opened international branches with strategic alignment to its parent.
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Oct 09, 2023

Associate

To connect in the mind or imagination
"I always somehow associate Chatterton with autumn" (John Keats).
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Subsidiary

Serving to assist or supplement; auxiliary.
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Associate

To connect or involve with a cause, group, or partner
Wasn't she associated with the surrealists?.
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Oct 07, 2023

Subsidiary

Secondary in importance; subordinate.
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Associate

To correlate or connect logically or causally
Asthma is associated with air pollution.
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Oct 07, 2023

Subsidiary

Of, relating to, or of the nature of a subsidy.
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Oct 07, 2023

Associate

To join in or form a league, union, or association
The workers associated in a union.
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Subsidiary

One that is subsidiary to another.
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Associate

To spend time socially; keep company
Associates with her coworkers on weekends.
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Subsidiary

A subsidiary company.
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Associate

A person united with another or others in an act, enterprise, or business; a partner or colleague.
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Subsidiary

(Music) A theme subordinate to a main theme or subject.
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Associate

An employee, especially one in a subordinate position,
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Subsidiary

Auxiliary or supplemental.
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Associate

A companion; a comrade.
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Subsidiary

Secondary or subordinate.
A subsidiary stream
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Associate

One that habitually accompanies or is associated with another; an attendant circumstance.
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Subsidiary

Of or relating to a subsidy.
Subsidiary payments to an ally
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Associate

A member of an institution or society who is granted only partial status or privileges.
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Subsidiary

A company owned by a parent company or a holding company, also called daughter company or sister company.
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Associate

Joined with another or others and having equal or nearly equal status
An associate editor.
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Subsidiary

(music) A subordinate theme.
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Associate

Having partial status or privileges
An associate member of the club.
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Subsidiary

One who aids or supplies; an assistant.
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Associate

Following or accompanying; concomitant.
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Subsidiary

Furnishing aid; assisting; auxiliary; helping; tributary; especially, aiding in an inferior position or capacity; as, a subsidiary stream.
Chief ruler and principal head everywhere, not suffragant and subsidiary.
They constituted a useful subsidiary testimony of another state of existence.
Tayyaba Rehman
Oct 07, 2023

Associate

Joined with another or others and having lower status.
The associate editor is someone who has some experience in editing but not sufficient experience to qualify for a senior post.
Tayyaba Rehman
Oct 07, 2023

Subsidiary

Of or pertaining to a subsidy; constituting a subsidy; being a part of, or of the nature of, a subsidy; as, subsidiary payments to an ally.
George the Second relied on his subsidiary treaties.
Tayyaba Rehman
Oct 07, 2023

Associate

Having partial status or privileges.
He is an associate member of the club.
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Subsidiary

One who, or that which, contributes aid or additional supplies; an assistant; an auxiliary.
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Associate

Following or accompanying; concomitant.
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Subsidiary

An assistant subject to the authority or control of another
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Associate

Connected by habit or sympathy.
Associate motions: those that occur sympathetically, in consequence of preceding motions
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Subsidiary

A company that is completely controlled by another company
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Associate

A person united with another or others in an act, enterprise, or business; a partner.
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Subsidiary

Relating to something that is added but is not essential;
An ancillary pump
An adjuvant discipline to forms of mysticism
The mind and emotions are auxilliary to each other
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Associate

Somebody with whom one works, coworker, colleague.
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Subsidiary

Functioning in a subsidiary or supporting capacity;
The main library and its auxiliary branches
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Associate

A companion; a comrade.
Tayyaba Rehman
Oct 07, 2023

Associate

One that habitually accompanies or is associated with another; an attendant circumstance.
Tayyaba Rehman
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Associate

A member of an institution or society who is granted only partial status or privileges.
Tayyaba Rehman
Oct 07, 2023

Associate

(algebra) One of a pair of elements of an integral domain (or a ring) such that the two elements are divisible by each other (or, equivalently, such that each one can be expressed as the product of the other with a unit).
Tayyaba Rehman
Oct 07, 2023

Associate

(intransitive) To join in or form a league, union, or association.
Tayyaba Rehman
Oct 07, 2023

Associate

(intransitive) To spend time socially; keep company.
She associates with her coworkers on weekends.
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Oct 07, 2023

Associate

To join as a partner, ally, or friend.
He associated his name with many environmental causes.
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Associate

(transitive) To connect or join together; combine.
Particles of gold associated with other substances
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Associate

(transitive) To connect evidentially, or in the mind or imagination.
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Associate

To endorse.
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Associate

(mathematics) To be associative.
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Associate

To accompany; to be in the company of.
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Associate

To join with one, as a friend, companion, partner, or confederate; as, to associate others with us in business, or in an enterprise.
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Associate

To join or connect; to combine in acting; as, particles of gold associated with other substances.
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Associate

To connect or place together in thought.
He succeeded in associating his name inseparably with some names which will last as long as our language.
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Oct 07, 2023

Associate

To accompany; to keep company with.
Friends should associate friends in grief and woe.
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Oct 07, 2023

Associate

To unite in company; to keep company, implying intimacy; as, congenial minds are disposed to associate.
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Associate

To unite in action, or to be affected by the action of a different part of the body.
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Oct 07, 2023

Associate

Closely connected or joined with some other, as in interest, purpose, employment, or office; sharing responsibility or authority; as, an associate judge.
While I descend . . . to my associate powers.
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Oct 07, 2023

Associate

Admitted to some, but not to all, rights and privileges; as, an associate member.
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Associate

Connected by habit or sympathy; as, associate motions, such as occur sympathetically, in consequence of preceding motions.
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Associate

A companion; one frequently in company with another, implying intimacy or equality; a mate; a fellow.
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Associate

A partner in interest, as in business; or a confederate in a league.
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Associate

One connected with an association or institution without the full rights or privileges of a regular member; as, an associate of the Royal Academy.
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Associate

Anything closely or usually connected with another; an concomitant.
The one [idea] no sooner comes into the understanding, than its associate appears with it.
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Oct 07, 2023

Associate

A person who joins with others in some activity;
He had to consult his associate before continuing
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Oct 07, 2023

Associate

A person who is frequently in the company of another;
Drinking companions
Comrades in arms
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Associate

Any event that usually accompanies or is closely connected with another;
First was the lightning and then its thunderous associate
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Associate

A degree granted by a two-year college on successful completion of the undergraduates course of studies
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Associate

Make a logical or causal connection;
I cannot connect these two pieces of evidence in my mind
Colligate these facts
I cannot relate these events at all
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Oct 07, 2023

Associate

Keep company with; hang out with;
He associates with strange people
She affiliates with her colleagues
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Associate

Bring or come into association or action;
The churches consociated to fight their dissolution
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Associate

Having partial rights and privileges or subordinate status;
An associate member
An associate professor
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Associate

It refers to a company with external influential investment affecting operational strategies.
The investor’s significant stake impacted the Associate’s strategic market approach.
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Oct 09, 2023

Common Curiosities

What defines a Subsidiary?

A company majority-owned by another company is a Subsidiary.
Tayyaba Rehman
Nov 25, 2023

What is an Associate?

An Associate is a company with substantial, non-majority ownership from another entity.
Tayyaba Rehman
Nov 25, 2023

How does ownership differ between Subsidiary and Associate?

Subsidiary implies majority ownership; Associate reflects 20%-50% ownership.
Tayyaba Rehman
Nov 25, 2023

How is control exerted in a Subsidiary?

The parent company exercises direct control over a Subsidiary.
Tayyaba Rehman
Nov 25, 2023

What type of control is observed with Associates?

The investor has significant influence but not control over Associates.
Tayyaba Rehman
Nov 25, 2023

Are Subsidiaries financially independent?

Subsidiaries’ financials are typically fully consolidated with the parent company.
Tayyaba Rehman
Nov 25, 2023

How are Associates reported financially?

Associates are often reported using the equity method in financial statements.
Tayyaba Rehman
Nov 25, 2023

What decision-making capacity do Associates have?

Associates retain more decision-making autonomy compared to Subsidiaries.
Tayyaba Rehman
Nov 25, 2023

How are Subsidiaries formed?

Through creating a new entity or acquiring majority ownership in an existing one.
Tayyaba Rehman
Nov 25, 2023

Can Subsidiaries make independent decisions?

Subsidiaries have limited autonomy, adhering to parent company directives.
Tayyaba Rehman
Nov 25, 2023

Can a Subsidiary become an Associate?

Yes, if the parent company reduces its stake below majority ownership.
Tayyaba Rehman
Nov 25, 2023

Is a Subsidiary’s failure a direct risk to the parent company?

Yes, financial and reputational risks can directly impact the parent company.
Tayyaba Rehman
Nov 25, 2023

What makes a company an Associate?

Acquiring a significant, non-controlling stake turns a company into an Associate.
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Nov 25, 2023

Can an Associate’s actions impact the investing company?

Yes, despite lower control, actions of an Associate can influence the investor’s standing.
Tayyaba Rehman
Nov 25, 2023

How do Associates and Subsidiaries impact parent company profits?

Both can contribute to profit through shared revenues or consolidated financials.
Tayyaba Rehman
Nov 25, 2023

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Author Spotlight

Written by
Tayyaba Rehman
Tayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.

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