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Subsidiary undertaking
Practical Law UK Glossary 0-107-7338 (Approx. 3 pages)
Glossary
Subsidiary undertaking
The meaning of this term varies depending on the context in which it is used. For the purpose of the Companies Act 2006, parent and subsidiary undertakings are defined in section 1162 of the Companies Act 2006 (together with Schedule 7). Under this provision, broadly, an undertaking is a parent undertaking in relation to a subsidiary undertaking if:
- It holds a majority of the voting rights in it; or
- It is a member of it and has the right to appoint or remove a majority of its board; or
- It has the right to exercise dominant influence over it by virtue of provisions contained in the subsidiary undertaking’s articles of association or a control contract; or
- It is a member of it and controls alone, under an agreement with other shareholders or members, a majority of its voting rights; or
- It has the power to exercise or actually exercises a dominant influence or control over it or both of them are managed on a unified basis.
Although a subsidiary will also be a subsidiary undertaking, not all subsidiary undertakings will be subsidiaries as the statutory definition of subsidiary undertaking is wider, as it also includes companies over which the parent undertaking exercises a "dominant influence", or both are managed on a "unified basis".