The Companies Act 2006 contains two definitions: one of "subsidiary" and the other of "subsidiary undertaking".
According to s.1159 of the Act a company is a "subsidiary" of another company, its "holding company", if that other company:
holds a majority of the voting rights in it, or
is a member of it and has the right to appoint or remove a majority of its board of directors, or
is a member of it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it, or if it is a subsidiary of a company that is itself a subsidiary of that other company.
The second definition is broader. According to s.1162 of the Companies Act 2006 an undertaking is a parent undertaking in relation to another undertaking, a subsidiary undertaking, if:
it holds a majority of the voting rights in the undertaking, or
it is a member of the undertaking and has the right to appoint or remove a majority of its board of directors, or
it has the right to exercise a dominant influence over the undertaking—
by virtue of provisions contained in the undertaking's articles, or
by virtue of a control contract, or
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.
An undertaking is also a parent undertaking in relation to another undertaking, a subsidiary undertaking, if:
it has the power to exercise, or actually exercises, dominant influence or control over it, or
it and the subsidiary undertaking are managed on a unified basis.
The broader definition of "subsidiary undertaking" is applied to the accounting provisions of the Companies Act 2006, while the definition of "subsidiary" is used for general purposes.[20]