Business Glossary

In general: two companies are affiliated when one owns less than a majority of the voting stock of the other, or when both are subsidiaries of a third company. A subsidiary is a company of which more than 50% of the voting shares are owned by another corporation, termed the parent company. A subsidiary is always, by definition, an affiliate, but subsidiary is the preferred term when majority control exists. In everyday use, affiliate is the correct word for intercompany relationships, however indirect, where the parent-subsidiary relationship does not apply.
Banking Act of 1933: any organization that a bank owns or controls by stock holdings, or which the bank's shareholders own, or whose officers are also directors of the bank.
Internal Revenue Service: for purposes of consolidated tax returns an affiliated group is composed of companies whose parent or other inclusive corporation owns at least 80% of voting stock.
Interstate Commerce Commission, Account 706:

1. Controlled by the accounting company alone or with others under a joint agreement.
2. Controlling the accounting company alone or with others under a joint agreement.

Investment Company Act: company in which there is any direct or indirect ownership of 5% or more of the outstanding voting securities.

company controlled by a bank holding company or Financial Holding Company that underwrites commercial paper, and government and corporate securities for distribution to investors. These companies, also known as Section 20 companies (named after a section of the glass-steagall act relating to securities underwriting), came into existence in 1987 when the Federal Reserve Board permitted bank-owned securities firms to underwrite and deal in limited amounts of commercial paper and municipal revenue bonds. In 1990, the Fed authorized the firms to deal in corporate stocks and bonds. Bank underwriting of corporate securities was at first limited to 5% of bank revenues, a ceiling that was eventually raised to 25% of total revenues in 1996. The gramm-leach-bliley act of 1999 removed these volume limits on corporate underwriting, as long as banking companies involved satisfied bank regulatory capital requirements. The modernization act also imposed limits on bank holding company investments in a securities subsidiary to 45% of consolidated assets or $50 billion, whichever is less. In 1999, there were 51 bankowned securities firms operating in the United States.