Companies Act 2006, section 1162

Parent and subsidiary undertakings

Part 38 Companies: interpretation

(1) This section (together with Schedule 7) defines “parent undertaking” and “subsidiary undertaking” for the purposes of the Companies Acts.

(2)An undertaking is a parent undertaking in relation to another undertaking, a subsidiary undertaking, if—

(a)it holds a majority of the voting rights in the undertaking, or

(b)it is a member of the undertaking and has the right to appoint or remove a majority of its board of directors, or

(c)it has the right to exercise a dominant influence over the undertaking—

(i)by virtue of provisions contained in the undertaking's articles, or

(ii)by virtue of a control contract, or

(d)it is a member of the undertaking and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in the undertaking.

(3)For the purposes of subsection (2) an undertaking shall be treated as a member of another undertaking—

(a)if any of its subsidiary undertakings is a member of that undertaking, or

(b)if any shares in that other undertaking are held by a person acting on behalf of the undertaking or any of its subsidiary undertakings.

(4)An undertaking is also a parent undertaking in relation to another undertaking, a subsidiary undertaking, if—

(a)it has the power to exercise, or actually exercises, dominant influence or control over it, or

(b)it and the subsidiary undertaking are managed on a unified basis.

(5)A parent undertaking shall be treated as the parent undertaking of undertakings in relation to which any of its subsidiary undertakings are, or are to be treated as, parent undertakings; and references to its subsidiary undertakings shall be construed accordingly.

(6)Schedule 7 contains provisions explaining expressions used in this section and otherwise supplementing this section.

(7)In this section and that Schedule references to shares, in relation to an undertaking, are to allotted shares.

Read section 1162 in the full Act → Definitions (8) Cases (3)

Definitions used in section 1162

the Companies Acts

(1) In this Act “the Companies Acts” means—

(a)the company law provisions of this Act,

(b)Part 2 of the Companies (Audit, Investigations and Community Enterprise) Act 2004 (c. 27) (community interest companies), and

(c)the provisions of the Companies Act 1985 (c. 6) and the Companies Consolidation (Consequential Provisions) Act 1985 (c. 9) that remain in force.

Defined in s.2(1) · see it in the full Act
undertaking

(1) In the Companies Acts“undertaking” means—

(a)a body corporate or partnership, or

(b)an unincorporated association carrying on a trade or business, with or without a view to profit.

Defined in s.1161(1) · see it in the full Act
parent undertaking

(4) The reference in subsection (3)(a) to the rights of the parent company and the reference in subsection (3)(c) to the interest of the parent company are, respectively, to rights and interests held by or attributed to the company for the purposes of the definition of “parent undertaking” (see section 1162) in the absence of which it would not be the parent company.

Defined in s.405(4) · see it in the full Act
member

(2) In sub-paragraph (1) “member” has the same meaning as it has by virtue of section 7(1) of that Act .

Defined in Sch.2 Pt.1 · see it in the full Act
director

In the Companies Acts “director” includes any person occupying the position of director, by whatever name called.

Defined in s.250 · see it in the full Act
articles

(4) References in the Companies Acts to a company's “articles” are to its articles of association.

Defined in s.18(4) · see it in the full Act
share

(1) In the Companies Acts “share”, in relation to a company, means share in the company's share capital.

Defined in s.540(1) · see it in the full Act
allotted shares

(2)References in the Companies Acts to issued or allotted shares, or to issued or allotted share capital, include shares taken on the formation of the company by the subscribers to the company's memorandum.

Defined in s.546(2) · see it in the full Act

Cases considering section 1162 (3)

Liberty Mercian Ltd v Cuddy Civil Engineering Ltd & Anor

[2013] EWHC 2688 (TCC) · 3 September 2013Defines

The court considered the statutory concepts of dominant influence or control and unified management in assessing whether CDDL was CCEL’s parent undertaking. It held that the statutory relationship was not established on the facts. (see paras [206]-[227])

Topalsson GmbH v Rolls-Royce Motor Cars Limited

[2023] EWHC 2092 (TCC) · 17 August 2023Defines

Defines the corporate relationship used in the agreement’s definition of “Affiliate”. The provision is referred to in construing the scope of BMW Group companies, but the judgment does not decide any issue arising from its statutory meaning (see para [22]).

Smithton Ltd v Naggar

[2013] EWHC 1961 (Ch) · 11 July 2013Defines

The provision was considered in explaining the earlier litigation’s allegation of dominant influence or control for parent and subsidiary undertakings. It did not determine whether Mr Naggar was a director of Hobart in the present claim. (see paras [74]-[83])

What each judgment says about section 1162 is in the case-law panel in the full Act.

Amendments and notes

10 notes from legislation.gov.uk

Modifications

  1. C1791Ss. 1161, 1162 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 52
  2. C1792S. 1162 modified (14.3.2012) by Charities Act 2011 (c. 25), ss. 55(3), 58, 355 (with ss. 20(2), 59, Sch. 8)
  3. C1793S. 1162 excluded in part (4.1.2022) by The National Security and Investment Act 2021 (Monetary Penalties) (Turnover of a Business) Regulations 2021 (S.I. 2021/1262), regs. 1(1), 3(3)
  4. C1794S. 1162 applied (with modifications) (26.10.2023) by Online Safety Act 2023 (c. 50), ss. 70(8), 240(4)
  5. C1795S. 1162 applied (with modifications) (10.1.2024) by Online Safety Act 2023 (c. 50), s. 240(1), Sch. 13 para. 5(8); S.I. 2023/1420, reg. 2(z17)(z36)
  6. C1796S. 1162 applied (with modifications) (10.1.2024) by Online Safety Act 2023 (c. 50), s. 240(1), Sch. 15 para. 9; S.I. 2023/1420, reg. 2(z24)
  7. C1797S. 1162 applied (with modifications) (23.8.2024) by 2003 c. 21, Sch. 16B para. 8 (as inserted by Media Act 2024 (c. 15), s. 55(3)(g), Sch. 11; S.I. 2024/858, reg. 2(1)(z5))
  8. C1798S. 1162 excluded in part (1.1.2025) by The Enterprise Act 2002 (Mergers and Market Investigations) (Determination of Control and Turnover for Penalties) Regulations 2024 (S.I. 2024/1236), regs. 1(1), 2(4)
  9. C1799S. 1162(2)(c) excluded (6.4.2025) by The Digital Markets, Competition and Consumers Act 2024 and Consumer Rights Act 2015 (Turnover and Control) Regulations 2024 (S.I. 2024/1243), regs. 1(3), 4(4), 6(4)
  10. C1800S. 1162(4)(a) excluded (6.4.2025) by The Digital Markets, Competition and Consumers Act 2024 and Consumer Rights Act 2015 (Turnover and Control) Regulations 2024 (S.I. 2024/1243), regs. 1(3), 4(4), 6(4)