affiliate

Corporate StructureLegal glossary term

Legal Definition

In a legal context, an affiliate refers to a subsidiary or associated entity that is part of a larger corporate structure, often indicating a shared ownership or operational relationship. This term defines the relationship between two or more companies where one entity controls or has a vested interest in another.

Plain-English Translation

An affiliate is like a company that is closely connected to the main company, like a partner or a subsidiary. It means one business owns or controls another business, which is part of the larger group.

Context in Contracts

It matters because it establishes the hierarchical structure of corporate governance and defines which entities are responsible for the overall operation or shared benefits within a legal framework.

Visual model

Understand affiliate fast

ELI10 illustration for affiliate
01

A parent corporation owning a subsidiary entity.

02

A joint venture where one party is an affiliate of the other.

Document context

How affiliate shows up in legal documents

What is it?

A relationship where one legal entity (e.g., corporation) has an ownership stake or control over another legal entity, often defined by a common shareholder structure or operational agreement.

Why does it matter?

It matters because it establishes the hierarchical structure of corporate governance and defines which entities are responsible for the overall operation or shared benefits within a legal framework.

When does it matter?

When discussing corporate structures, joint ventures, ownership chains, or subsidiary relationships within a legal document to define the scope of control or shared obligations.

Where is it usually seen?

In corporate charters, shareholder agreements, joint venture agreements, and regulatory filings where one entity is defined as an affiliate of another.

Who is affected?

The parent company, the subsidiary company, and the shareholders who hold interests in both entities are affected by the definition of the affiliate relationship.

How does it work?

It works by defining the legal connection between two companies; for instance, a parent company controls a subsidiary, or a subsidiary is part of a larger group that dictates its operations.

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Wikipedia

Affiliate marketing

Affiliate marketing is a marketing arrangement in which affiliates receive a commission for each visit, signup or sale they generate for a merchant. This arrangement allows businesses to outsource part of the sales process. It is a form of performance-based...

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Disclaimer: We do not provide legal advice. We translate legal language into plain English and help you prepare for a conversation with a lawyer.