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An “[[affiliate]]” is really not a complicated idea in the abstract but yet in the world of commercial contracts, it is one which [[Legal Eagle|our learned friends]] rejoice in overdetermining. For these men and women, a “affiliate” of an undertaking could be: | |||
For | |||
*'''Parent''': its parent or holding company, which holds all or a majority of its ordinary share capital — often abbreviated as a “holdco” | *'''Parent''': its parent or holding company, which holds all or a majority of its ordinary share capital — often abbreviated as a “holdco” | ||
*'''Child''': its subsidiary — a company the ordinary share capital of which it holds all or a majority | *'''Child''': its subsidiary — a company the ordinary share capital of which it holds all or a majority | ||
*'''Sibling''': a company in common ownership with the corporate being; that is to say, a company that shares the same parent or holding company. | *'''Sibling''': a company in common ownership with the corporate being; that is to say, a company that shares the same parent or holding company. | ||
Pedants will be anxious to point out that, ordinary shares being the divisible ownership units that they are, and different degrees of control and voting rights attaching to different classes of share, there are ''degrees'' of ownership, and affiliation, and some ought to imply more connectedness than others. For example, if one owns a small parcel of shares in a listed company does that make it your affiliate? One would like to think not. | |||
Any confusion is usually resolved by pointing at the definition of “subsidiary” and “holding company” in the [[Companies Act 2006 (UK)|Companies Act]]. The {{isdama}} does a reasonably neat job of capturing the above by reference to the majority of voting control. | |||
Revision as of 22:40, 12 December 2020
An “affiliate” is really not a complicated idea in the abstract but yet in the world of commercial contracts, it is one which our learned friends rejoice in overdetermining. For these men and women, a “affiliate” of an undertaking could be:
- Parent: its parent or holding company, which holds all or a majority of its ordinary share capital — often abbreviated as a “holdco”
- Child: its subsidiary — a company the ordinary share capital of which it holds all or a majority
- Sibling: a company in common ownership with the corporate being; that is to say, a company that shares the same parent or holding company.
Pedants will be anxious to point out that, ordinary shares being the divisible ownership units that they are, and different degrees of control and voting rights attaching to different classes of share, there are degrees of ownership, and affiliation, and some ought to imply more connectedness than others. For example, if one owns a small parcel of shares in a listed company does that make it your affiliate? One would like to think not.
Any confusion is usually resolved by pointing at the definition of “subsidiary” and “holding company” in the Companies Act. The ISDA Master Agreement does a reasonably neat job of capturing the above by reference to the majority of voting control.