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Parent undertaking
Practical Law UK Glossary 5-381-0486 (Approx. 3 pages)
Glossary
Parent 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 section 1162, 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.
Note that the definition of parent undertaking in section 1162 is wider than the definition of holding company in section 1159. See also Parent company.