Affiliate - ISDA Provision

2002 ISDA Master Agreement A Jolly Contrarian owner’s manual™ Affiliate in a Nutshell™ The JC’s Nutshell™ summaries are moving to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get them here. Sign up at Substack. Affiliate in all its glory “Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person. edit Related agreements and comparisons Click here for the text of Section Affiliate in the 1992 ISDA Template:Isdadiff Affiliate Resources and Navigation This provision in the 1992 Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project Navigation Preamble | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 Events of Default: 5(a)(i) Failure to Pay or Deliver • 5(a)(ii) Breach of Agreement • 5(a)(iii) Credit Support Default • 5(a)(iv) Misrepresentation • 5(a)(v) Default Under Specified Transaction • 5(a)(vi) Cross Default • 5(a)(vii) Bankruptcy • 5(a)(viii) Merger without Assumption • Termination Events: 5(b)(i) Illegality • 5(b)(ii) Force Majeure Event • 5(b)(iii) Tax Event • 5(b)(iv) Tax Event Upon Merger • 5(b)(v) Credit Event Upon Merger • 5(b)(vi) Additional Termination Event Index: Click ᐅ to expand: 2002 ISDA - Premium 1992 ISDA - Premium Premium version of this page

Overview

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The Affiliate definitions are identical between the 1992 ISDA and the 2002 ISDA.

A potentially wide definition which could include, for example, special purpose vehicles whose shareholding is owned by the same corporate service provider, or separate stand-alone hedge funds managed by the same administrator or investment manager.

Summary

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An “affiliate” is really not a complicated idea in the abstract, yet in the world of commercial contracts, our learned friends rejoice in overdetermining it all the same. 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.

And that is about it. Pedants will be anxious to point out that, 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 imply more connectedness than others. Any confusion is usually resolved by pointing at the definition of “subsidiary” and “holding company” in the Companies Act, or similar legislation in a jurisdiction near you. The ISDA Master Agreement does a reasonably neat job of capturing the above by reference to the majority of voting control.

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• The JC’s famous Nutshell™ summary of this clause

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See also

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• Affiliate under the Equity Derivatives Definitions — which um points back to this definition in the ISDA Master Agreement. As it should.
• Affiliate in the abstract