Template:Affiliate capsule

The idea of an “affiliate” is really not a complicated one in the abstract but yet in the world of contracting commercial undertakings it is one which our learned friends rejoice in overdetermining.

For corporate being, an affiliate 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.

No doubt 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 some ought to imply more connectedness than others. Fur 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.

In any event the confusion is usually resolved by pointing at the definition of “subsidiary” and “holding company” contained 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.