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What does “associated entity” mean?

Frequenty Asked Questions

What does “associated entity” mean?

Entity means a natural person (e.g. Bill Bloggs), a body corporate (e.g. BB Pty Ltd), a partnership (Bill Bloggs and Sons) or a trust (Bill Bloggs as trustee for the Bill Bloggs Family Trust).

Section 50AAA of the Corporations Act 2001 (Cth) defines associated entities. An entity is associated with another entity if they are members of the same corporate group, or if one entity has a certain degree of control over the other. For example, 2 companies are associated entities if one controls the composition of the board of another, such that the second company is a subsidiary of the first.

The control might also arise in other ways, such as under a business loan agreement by one individual to another which requires that the lender approve all significant financial and operational decisions that the borrower makes as part of his or her business. By reason of this control, the borrower and the lender are associated entities.

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