Q&As

Can a subsidiary company be appointed as a commercial agent of its parent company?

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Published on: 08 September 2017

The Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053 (commercial agents Regulations) apply only to the relationship between the principal and the commercial agent. They do not apply to the agent's external authority or to relationships with third parties under transactions the agent negotiates or concludes.

A commercial agent is a self-employed intermediary who has continuing authority to:

  1. negotiate the sale or purchase of goods on behalf of a

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Jurisdiction(s):
United Kingdom
Key definition:
Subsidiary definition
What does Subsidiary mean?

There are two suggested definitions for the term 'subsidiary', as commonly used in agreements. CA 2006, s 1159 provides that a company is a holding company of another company (its subsidiary) if it satisfies one of three tests, two of which require it to be a member of the other company (as well as to possess certain rights, which go to its voting powers). Membership of a company is a question of fact and the court has found that if a company (company A) has transferred shares in another company (company B) to a lender in connection with the taking of security and the name of that lender or the lender’s nominee has been entered in the register of members, then company A is not a member of company B in respect of those shares: see Enviroco Ltd v Farstad Supply A/S.

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