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Where a corporate undertaking is part of a group, the ordinary rule is that the entire group must register for the CRC scheme as a single Participant.  The highest parent undertaking in the group (or 'Primary Member') is responsible for compliance.  When considering which undertakings are subsidiaries for the purposes of establishing the CRC group, the "control tests" set out in S.1162 of the Companies Act 2006 must be applied. 

In order to satisfy the control tests, the parent undertaking must:

• Hold a majority of the voting rights in the subsidiary undertaking; or                
• Be a share holder of the subsidiary undertaking and have the right to appoint or remove the majority of the subsidiary undertaking's Board of Directors; or                
• Have the right to exercise a dominant influence over the subsidiary undertaking; or                   
• Control a majority of the voting rights in the subsidiary undertaking either on its own or because of a shareholder's agreement; or                   
• Be managed on a unified basis with the subsidiary undertaking for the CRC.

Where a subsidiary undertaking meets the qualification criteria for the CRC in its own right and could therefore be a Participant, it is classed as a Significant Group Undertaking ("SGU") and can be "disaggregated" from the remainder of the group of which it forms part.  This might be advantageous from a cost management perspective or if there is a need to protect the SGU's individual "brand identity". The following conditions apply:                    

• Disaggregating the SGU must not cause the parent undertaking and the remainder of the group to fall below the qualification threshold towards the CRC compliance.                   
• The SGU must consent to the disaggregation.

If a group wishes to apply to disaggregate an SGU, it will need to do so within the first three months of the registration window for each compliance year.  In respect of the Introductory Phase, such an application would need to be submitted at the latest by 30 June 2010.  Once the disaggregation has taken place, the SGU must then go and register as a standalone Participant.If the 30^th June deadline is missed, the SGU will be treated as part of the corporate group forthe Introductory Phase so that the primary member of the group will need to report on and buy allowances for the SGU's energy use. As a warning note, if a successful application to disaggregate is submitted before the 30^th

June deadline but the SGU then fails to register itself as a standalone Participant, the CRC provisions will treat the unregistered SGU as still forming part of the Primary Member's group.