Contractual Control

From Open Risk Manual


Contractual Control. Control vested in an entity by virtue of the terms in some contract between that entity and others.

Issues and Challenges

See SME REview note of 16 Jan 2013: Percentage mechanism (in contracts etc.) would be factored in. Hence percentages as contractual terms. For instance an option to exercise which would give another 5 percent control. So there is percentage control with or without share ownership. Example: In a partnership this might be in the Partnership Agreement, which would identify beneficial ownership and control as potentially 2 distinct things. Contract can say anything. Implications: This means that there are percentages of de jure control based in contract, similar to those based in constitutional instruments (shares, General Partner equity). The concepts of Parent, Siinificant Part Owner etc. can then potentially be defined int erms of the percentages of all applicable instruments by which control may be formally defined.


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