Associated Companies Flowchart: Unveiling Financial Interconnections

To simplify the intricate relationships and financial interdependencies between businesses, we have created an associated companies flowchart. In the dynamic landscape of corporate associations, businesses often form partnerships, joint ventures, and alliances. The associated companies flowchart serves as a visual roadmap, offering clarity on the intricate web of relationships between entities.

Substantial Commercial Independence:

There are three types of commercial interdependence:

• Financial – one company financially supports the other, or each has a financial interest in the affairs of the same business.
• Economic – the companies have the same economic objective, common customers or the activities of one benefit the other.
• Organisational – the companies have common management, employees, premises or equipment.

Just one of the above is enough for substantial commercial interdependence to exist. For example, if a company lends to another that may be enough to constitute substantial commercial interdependence even if there is no other link between them.

In other cases, there may be a mixture of all three elements. For example, if a pub has split its drink sales and catering into different companies, those companies are likely to be economically interdependent (having the same customers and activities that benefit each other) as well as organisationally (having the same premises, staff and so on) and financially. In every instance, the different factors and their importance to the companies need to be weighed up.

However, it is worth remembering that it is the interdependence of the companies, not the shareholders, that is important. For example, if Mr T lends money to his son’s company, that would not create financial interdependence, but could do so if the loan were made from Mr T’s company instead.

An example of joint control