World Investment Report--METHODOLOGICAL NOTES(PDF 43)

1. Transnational corporations
Transnational corporations (TNCs) are incorporated or unincorporated enterprises
comprising parent enterprises and their foreign affiliates. A parent enterprise is defined as
an enterprise that controls assets of other entities in countries other than its home country,
usually by owning a certain equity capital stake. An equity capital stake of 10 per cent or
more of the ordinary shares or voting power for an incorporated enterprise, or its equivalent
for an unincorporated enterprise, is normally considered as the threshold for the control of
assets.1 A foreign affiliate is an incorporated or unincorporated enterprise in which an
investor, who is a resident in another economy, owns a stake that permits a lasting interest in
the management of that enterprise (an equity stake of 10 per cent for an incorporated
enterprise, or its equivalent for an unincorporated enterprise). In WIR, subsidiary
enterprises, associate enterprises and branches – defined below – are all referred to as
foreign affiliates or affiliates.
? A subsidiary is an incorporated enterprise in the host country in which another entity
directly owns more than a half of the shareholder's voting power, and has the right to
appoint or remove a majority of the members of the administrative, management or
supervisory body.
? An associate is an incorporated enterprise in the host country in which an investor
owns a total of at least 10 per cent, but not more than half, of the shareholders’ voting
power.
? A branch is a wholly or jointly owned unincorporated enterprise in the host country
which is one of the following: (i) a permanent establishment or office of the foreign
investor; (ii) an unincorporated partnership or joint venture between the foreign direct
investor and one or more third parties; (iii) land, structures (except structures owned
by government entities), and /or
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