Does a parent company have access rights to background and foreground as an affiliate company?

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According to article II.1.2 of the standard model Grant Agreement, an affiliated entity means “any legal entity that is under the direct or indirect control of a beneficiary, or under the same direct or indirect control as the beneficiary, control taking any of the following forms:

(a)   the direct or indirect holding of more than 50% of the nominal value of the issued share capital in the legal entity concerned, or of a majority of the voting rights of the shareholders or associates of that entity;

(b)  the direct or indirect holding, in fact or in law, of decision-making powers in the legal entity concerned.

A parent company, i.e. a company holding enough percentage of the nominal value of the issued share capital of another company to control its management, should therefore not be considered as an affiliated company. Indeed, parent companies are either under the control of a beneficiary (they are in the opposite position, i.e., controlling the beneficiary) or under the same direct control.

Nevertheless, the general principle according to which beneficiaries may agree on more favourable or broader access rights also applies here. For example, beneficiaries could agree in their consortium agreement to grant access rights to affiliates other than those mentioned above, including parent companies. The IPCA Model of Consortium Agreement foresees this possibility, since it establishes a broader definition of affiliated companies, which encompasses entities controlling the beneficiary.