How “Affiliate” is Defined - Commentary to Florida Trust Code

Legal Commentary on the Definition of “Affiliate”

Fla. Stat. § 736.0103(2) defines the term “affiliate.” The text of the subsection reads:

“Affiliate” means any person or entity that directly or indirectly through one or more intermediaries owns or controls, is owned or controlled by, or is under common control or ownership with, the fiduciary. An affiliate may include, but is not limited to, an investment adviser, administrator, broker, transfer agent, placement agent, servicing agent, registrar, custodian, underwriter, sponsor, distributor, or manager.

Thus, an affiliate is another person or entity related to a fiduciary (typically, this would be a trustee) by means of control or ownership. An affiliate may be controlled by a fiduciary, as is often the case with an investment advisor to a trustee. Alternatively, an affiliate could control a fiduciary, as would be the case for a parent company over a bank acting as trustee. Finally, an affiliate could be controlled by the same person/entity as a fiduciary, such as a sister company owned by the same parent company as a bank acting as trustee.

History of the Definition of “Affiliate”

The term “affiliate” has been given the same definition since the Florida Trust Code took effect in 2007.

The definition appears to have been derived from Fla. Stat. § 607.0901(1)(a) of the Florida Business Corporation Act. That definition was itself derived from Rule 405 adopted under the Securities Act of 1993. See 17 C.F.R. § 230.405. Judge William A. Van Nortwick, Jr. of the First District Court of Appeal provides a wonderful summary of the history of the Florida Business Corporation Act’s definition of “affiliate” in his concurring opinion in Churchville v. Gacs Inc., 973 So.2d 1212, 1217 (Fla. 1st DCA 2008).

This article is part of the PTM Legal Commentary to the Florida Trust Code. Click here to navigate through the entire commentary.