Definition of affiliate
In contracts, an affiliate is any company that controls, is controlled by, or is under common control with a party, such as its parent, subsidiaries and sister companies. The definition decides who else can use rights or is bound by duties under the contract.
Analyze your contracts. Extract important clauses.
Try our AI contract analysis and extract important clauses and information from existing contracts.
Save your favourite clauses
Insert directly with a single click
Upload preferred precedents
Sample Definition of affiliate clauses
9. Amendment to Definition of Affiliate. The definition of “Affiliate” in Section 8.4 of the Investor Rights Agreement is amended and restated as follows: “Affiliate” of a specified Person means a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided that no portfolio company of the Shareholder, GMS Pharma (Singapore) Pte. Limited (or its Affiliates), or Tenshi Life Sciences Private Limited (or its Affiliates) shall be deemed to be an “Affiliate”.
Source
Augmedix, Inc. (AUGX)Definition of Affiliate. The definition of Affiliate in Section 1(b) of the Agreement is deleted in its entirety and replaced with the following:
““Affiliate” means, with respect to a specified party, any person, firm, corporation, partnership, or other entity that is controlling, controlled by, or is under common control with that specified party. With respect to CommonSpirit, “Affiliate” also includes any person, firm, corporation, partnership, or other entity that: (a) is managed, operated or controlled, directly or indirectly, by CommonSpirit, Dignity Health, or Dignity Community Care (“DCC”), a Colorado non-profit corporation respectively; or (b) is an Accountable Care Organization or Clinically Integrated Network, physician group, satellite office, or entity associated with CommonSpirit, Dignity Health, or DCC, to which they now or in the future respectively provide information technology or management services. For purposes of this definition “control” means (y) the ability to appoint management or the majority of an entity’s board of directors, or (z) ownership or control of fifty percent (50%) or greater of the voting rights of the entity in question or the power to otherwise direct the affairs of the entity in question.”
3. Definition of Affiliate of Section 15 of the Master Lease is hereby amended and restated in its entirety as follows: “Affiliate” means any entity controlling, controlled by or under common control with the referent entity; provided, however, that in respect of Lessee and Guarantor, the term “Affiliate” shall only refer to wholly-owned subsidiaries of Guarantor or Lessee; “control” includes (i) the ownership of 25% or more of the voting stock or other ownership interest of any entity and (ii) the status of a general partner of a partnership or managing member of a limited liability company.
Source
Rent the Runway, Inc.. Definitions.
1.1. “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act; provided that (i) with respect to Bain Capital, the definition of Affiliate shall include any Person under common management with Bain Capital whether or not such Person would be an Affiliate as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, (ii) with respect to Highland Capital, the definition of Affiliate shall include any Person under common management with Highland Capital whether or not such Person would be an Affiliate as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, (iii) with respect to KPCB, the definition of Affiliate shall include any Person under common management with KPCB whether or not such Person would be an Affiliate as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, (iv) with respect to TCV, the definition of Affiliate shall include any Person under common management with TCV whether or not such Person would be an Affiliate as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, (v) with respect to Fidelity, the definition of Affiliate shall include any investment company registered under the Investment Company Act of 1940 advised or sub-advised by Fidelity or any affiliated investment advisor of Fidelity, one or more mutual fund, pension fund, pooled investment vehicle or institutional client advised or sub-advised by Fidelity or any affiliated investment advisor of Fidelity whether or not such Person would be an Affiliate as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act; (vi) with respect to Franklin, the definition of Affiliate shall include any investment company registered under the Investment Company Act of 1940 advised or sub-advised by Franklin Advisers, Inc. or any affiliated investment advisor of Franklin Advisers, Inc., one or more mutual fund, pension fund, pooled investment vehicle or institutional client advised or sub-advised by Franklin Advisers, Inc. or any affiliated investment advisor of Franklin Advisers, Inc. whether or not such Person would be an Affiliate as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, and (vii) with respect to each T. Rowe Price Investor, the definition of Affiliate shall include any investment company registered under the Investment Company Act of 1940 advised or sub-advised by T. Rowe Price or any affiliated investment advisor of T. Rowe Price, one or more mutual fund, pension fund, pooled investment vehicle or institutional client advised or sub-advised by T. Rowe Price or any affiliated investment advisor of T. Rowe Price whether or not such Person would be an Affiliate as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
Source
Schrodinger, Inc. (SDGR)6.10Definition of Affiliate. For purposes of this Agreement, the term “Affiliate” shall mean any entity in which a party holds a 50% or greater equity interest or any entity controlling, controlled by or under common control with such party, directly or indirectly by or through one or more intermediaries.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term “control” means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term “controlled” has the meaning correlative to the foregoing; provided, that, for any purpose hereunder, in each case both before and after the Effective Time, none of the Persons listed in clause (i), (ii), (iii), or (iv) shall be deemed to be Affiliates of any Person listed in any other such clause: (i) Jefferies, Phlcorp, Baldwin, and Vitesse Energy Finance, (ii) Gerrity, Cree, 3B, and Gerrity Bakken, LLC, (iii) SpinCo, SpinCo VEL-Sub, SpinCo VOL-Sub, Vitesse Oil, VEL, Vitesse Oil, Inc., and Vitesse Management Company LLC, and (iv) Jefferies Capital Partners LLC, JCP V LLC, Jefferies SBI Strategic Investments USA LLC, Jefferies Capital Partners V L.P., and Jefferies SBI USA Fund, L.P.
(i). “Affiliate” shall mean any person who controls, is under common control with, or is controlled by the person to whom reference is being made; and for the purposes of this definition of Affiliate, control shall be deemed to exist in a person who beneficially owns ten percent (10%) or more of the outstanding equity interests (or options, warrants, or other rights to acquire such equity interests) of another person.
(a) “Affiliate” means any corporation, firm, partnership or other entity which directly or indirectly controls, is controlled by, or is under common control with a party. As used in this definition of Affiliate, “control” means (a) in the case of corporate entities, direct or indirect ownership of more than 50% of the stock or shares having the right to vote for the election of directors (or such lesser percentage that is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction), and (b) in the case of non-corporate entities, the direct or indirect power to manage, direct or cause the direction of the management and policies of the non-corporate entity or the power to elect more than 50% of the members of the governing body of such non-corporate entity.
(c) Except as permitted by subsection (d) below, Executive (i) shall devote his full working time, energy, skill, and best efforts to the performance of his duties hereunder, in a manner that will comply with Company’s published rules and policies in effect from time to time, and (ii) shall not be employed by or participate or engage in or in any manner be a part of the management or operation of any business enterprise other than Company and its Affiliates without the prior written consent of Company, which consent may be granted or withheld in the sole discretion of Company. “Affiliate” as used in this Agreement means any person or entity controlling, controlled by, or under common control with, Company. “Control,” as used in the definition of Affiliate, means the power to direct the management and policies of a person or entity, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise; the terms “controlling” and “controlled” shall have correlative meanings. Further, any person or entity that owns beneficially, either directly or through one or more intermediaries, more than 20 percent of the ownership interests in a specified entity shall be presumed to control such entity for purposes of the definition of Affiliate.
“Affiliate” shall mean with respect to any person, any other person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such first mentioned person. As used in this definition of Affiliate, the term “control” (including “controlled by”, or “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, as trustee, by contract, or otherwise.
a. “Affiliate” shall mean any corporation or other entity that, as of the Effective Date, directly or indirectly controls, is controlled by, or is under common control with, another corporation or entity. Control means direct or indirect ownership of, or other beneficial interest in, fifty percent (50%) or more of the voting stock, other voting interest, or income of a corporation or other entity. A corporation or other entity shall be an “Affiliate” only so long as such corporation or other entity meets the definition set forth in this Section 1.a. A corporation or entity that meets the definition of Affiliate as of the Effective Date, but does not meet such definition at some point thereafter, shall no longer enjoy any license or other benefits accorded to an Affiliate under this Agreement as of the date that such corporation or entity ceases to meet the definition of Affiliate.
Source
MedicaMetrix, Inc/DEDefinition of Affiliate. The Company shall apply the following definition of “Affiliate” to the Janus Investor under each of the Transaction Documents (in place of the existing definition of “Affiliate” under the Transaction Documents): “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital or other investment fund, registered investment company, investment fund or account now or hereafter existing that is controlled by one or more general partners, managing members or investment adviser of, or shares the same management company or investment adviser with, such Person; provided, however, that (i) the Janus Investor shall be deemed to be an “Affiliate” of each other Janus Investor, and (ii) an entity that is an “Affiliate” of a Janus Investor shall not be deemed to be an “Affiliate” of any other Janus Investor unless such entity is a Janus Investor (and, for the avoidance of doubt, an “Affiliate” of such entity shall not be deemed an “Affiliate” of any Janus Investor solely by virtue of being an “Affiliate” of such entity).
Source
ANAPTYSBIO, INC (ANAB)2.2 “Affiliate(s)” shall mean any corporation or other entity, whether de jure or de facto, which is directly or indirectly controlling, controlled by or under common control of a Party hereto for so long as such control exists. For the purposes of this definition of Affiliate(s), “control” shall mean the direct or indirect ownership of at least fifty percent (50%) of the outstanding shares or other voting rights of the subject entity having the power to vote, or if not meeting the preceding, the maximum voting right that may be held by the particular Party under the laws of the country where such entity exists, or the power to otherwise direct the affairs of the entity.
Source
89bio, Inc. (ETNB)“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling or Controlled by, or under direct or indirect common Control with, such first Person.
What is an affiliate?
In a contract, an affiliate is a company that controls a party, is controlled by it, or is under common control with it. That covers its parent company, its subsidiaries and its sister companies (other subsidiaries of the same parent). The definition is usually in the definitions section and works like a switch: wherever the contract mentions “Affiliates”, it reaches every company in the group that meets the test.
This is different from affiliate marketing, where an “affiliate” is an independent partner paid a commission for referrals.
Affiliate legal definition
The most widely copied wording comes from US securities rules (SEC Rule 405): an affiliate is “a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.” Most commercial contracts use a version of it.
Control is the key word. Contracts define it in one of two ways:
- Ownership test: owning more than 50% of the voting shares or interests.
- Power test: the power to direct the management and policies of the company, through ownership, contract or otherwise.
In Germany, the closest concept is “verbundene Unternehmen” (§ 15 AktG), which includes majority-owned, controlled and group companies, cross-shareholdings and parties to enterprise agreements.
What is an affiliate company?
An affiliate company is one that is linked to another through ownership or control. In everyday business language, “affiliate” sometimes means a company in which another holds a minority stake, while “subsidiary” means one it controls. In contracts, the defined term usually includes both directions of control, so a subsidiary is also an affiliate of its parent.
| Relationship | Affiliate under the usual definition? |
|---|---|
| Parent company | Yes |
| Subsidiary (over 50% owned) | Yes |
| Sister company (same parent) | Yes |
| Minority investment (for example 20%) | Usually no, unless control is defined lower |
| Joint venture partner | Usually no |
Why the affiliate definition matters
- Licenses and services: whether group companies may use the software, data or services.
- Confidentiality: whether information can be shared within the group.
- Non-solicitation and non-compete: whether restrictions also bind or protect group companies.
- Assignment: whether a party can transfer the contract to an affiliate without consent.
- Liability and caps: whether claims and limits cover the whole group.
What a definition of affiliate should include
- Control test: the ownership threshold, the power test, or both.
- Direction: controls, controlled by and under common control.
- Timing: “for so long as such control exists”, so a company sold out of the group stops being an affiliate.
- Exclusions: for example portfolio companies of a private equity investor, which may otherwise all count.
Definition of affiliate clause example
Sample clause: Definition of affiliate
Add this clause to a contract, send it and get it signed in fynk.
Use it in fynk for freeHow to check affiliate rights across a contract portfolio
When your group restructures or sells a business, the question is which contracts the change affects. fynk’s AI search finds every agreement that grants rights to affiliates or allows assignment to them, and multi-entity management keeps each group company’s contracts apart while still searchable together.
Which contracts contain a definition of affiliate?
Almost every commercial agreement with a definitions section: license and SaaS agreements, supply and offtake agreements, referral and distribution agreements, NDAs, and loan agreements. These free templates include one:
Free templates with this clause
Offtake agreement template for product supplyAffiliate means any person that directly, or through intermediaries, controls, is controlled by or is under common control with the person specified.
Use the free template
Sales partner referral agreement templateAn affiliate is any entity controlling, controlled by or under common control with a party, with control defined as power over management and policies.
Use the free template
Related clauses
- Change of control A "change of control" clause in a contract is designed to protect parties by outlining specific terms and conditions that come into effect when there is a significant shift in ownership or control of one party involved in the agreement, such as through a merger, acquisition, or sale. This clause often permits the other party to terminate the contract, renegotiate terms, or take other defined actions if such a change occurs, ensuring transparency and continuity amid organizational transitions.
- Definition of change of control A "Change of Control" clause defines the conditions under which a shift in ownership or management of a company occurs, typically outlining scenarios like mergers, acquisitions, or significant transfers of shares. This clause ensures that both parties are aware of the triggers that could alter the contractual relationship or obligations under the agreement.
- Capitalized terms Capitalized terms in a contract are specific words or phrases that have been given a distinct, defined meaning within that document. This convention helps ensure clarity and consistency throughout the contract by clearly identifying terms with special significance or particular definitions.
- Corporate separateness The corporate separateness clause ensures that each corporate entity within a group maintains its legal and financial independence from other affiliated entities. This clause protects each entity from being automatically liable for the debts and obligations of its affiliates, thereby preserving their distinct legal identities.
Frequently asked questions
A company connected to another through ownership or control, such as a parent, a subsidiary or a sister company. In marketing, it can also mean a partner paid commission for referrals, which is a different meaning.
Yes, under the usual contract definition. A subsidiary is controlled by its parent, so each is an affiliate of the other, and subsidiaries of the same parent are affiliates of each other too.
Whatever the contract says. Most definitions use more than 50% of voting shares or the power to direct management, but some contracts set a lower threshold, such as 25% or 20%.
Related party is an accounting and tax term that is wider. It can include individuals, such as directors and their families, and companies under significant influence. Affiliate in a contract is usually limited to control relationships.
More clauses from the library
See allDefinition of change of control
A "Change of Control" clause defines the conditions under which a shift in ownership or management of a company occurs, typically outlining scenarios like mergers, acquisitions, or significant transfers of shares. This clause ensures that both parties are aware of the triggers that could alter the contractual relationship or obligations under the agreement.
7 example clauses
Definition of environmental laws
The "Definition of Environmental Laws" clause outlines the specific legislations, regulations, and legal frameworks that pertain to the protection and conservation of the environment. This clause details applicable federal, state, and local environmental statutes, compliance requirements, and the standards that the parties involved in a contract must adhere to.
16 example clauses
Definitions
The Definitions clause in a contract specifies the precise meanings of key terms used throughout the document, ensuring clarity and a mutual understanding between the parties involved. By outlining these terms at the beginning, it helps prevent misunderstandings and disputes over interpretations during the contract's execution.
9 example clauses
Analyze your contracts. Extract important clauses.
Try our AI contract analysis and extract important clauses and information from existing contracts.
Save your favourite clauses
Insert directly with a single click
Upload preferred precedents