Affiliate

Meaning and definition of Affiliate

The term "affiliate" refers to a type of inter-company relationship that involves one of the companies to own less than a majority of the stock held by the other company. Putting it other way, it can also be explained as a type of inter-company relationship wherein at least two individual companies are subsidiaries of a larger company.

As illustrated by Investopedia, let’s presume that BIG Corp. owns 40% of MID Corp.’s common stock and 75% of TINY Corp. in this situation, MID Corp. and BIG Corp. boast an affiliate relationship, while TINY Corp. is a subsidiary to the BIG Corp.