An associate in ifrs is an entity over which another company exercises significant influence.
Significant influence is the power to participate in an associate entity’s financial and operating policy decisions without having control or joint control.
An entity may exercise significant influence if it owns, directly or indirectly or through its subsidiaries, 20 percent or more of the voting power of an investee unless an entity can demonstrate that such influence does not exist.
For example, company A acquires 18% of the interest of entity B.
The company has a representation on the board of entity B.
In this case, there is a significant influence because although the share of company A over entity B is less than 20%, the fact that company A has a representation in the investee’s management body allows inferring that this entity can participate in the policy decisions of financial and operating of its associate entity.
If an entity controls a company, and therefore there is no significant influence, the investee will cease to be an associate and become a subsidiary entity.
If you want more information, you can read the following post.
Significant influence occurs when an entity has the power to intervene in an associate’s financial and operating policy. When a company acquires a percentage of share in another entity, three events can be presented, which are shown below. Paragraph 5