The criteria to be Yotzei Lechem Mishneh with another-Being Yotzei with his Hamotzi and eating his bread:

Is one who heard Hamotzi required to taste from the bread of the Lechem Mishneh in order to fulfill one’s obligation?[1]

Every individual is required to eat from the actual bread of the Lechem Mishneh in order to fulfill his obligation. Thus, even if there is plenty of bread already on the table upon Lechem Mishneh being made by the father of the home, or other individual, nonetheless all those who plan on fulling their obligation with his Lechem Mishneh must actually eat from his bread and it does not suffice to simply hear him say the blessing of Hamotzi and have him eat it. [Thus, in addition to waiting for the person who performed Lechem Mishneh to eat from the bread prior to them eating from it, likewise they are not to eat any other bread on the table until they first eat a piece of bread from the Lechem Mishneh.[2]]

Should all the participants recite the blessings of Hamotzi to themselves prior to eating the bread, or should be fulfill their obligation with hearing it from the person with the Lechem Mishneh?

From the letter of the law, whenever a group of people participate in the same meal, one person is to say the blessing of Hamotzi on behalf of everyone.[3] Accordingly, it would be proper for everyone to listen to the blessing of the leader of the table and fulfill his obligation with him. Nonetheless, the general widespread custom during the year is for the participants say their own blessing of Hamotzi.[4] However, some Poskim[5] rule that the above applies only during the week, however on Shabbos and Yom Tov, one cannot fulfill his obligation of Lechem Mishneh with another person’s Hamotzi unless he also fulfills his obligation with the blessing, and does not say the blessing on his own. Other Poskim[6], however, rule that one can fulfill his obligation by simply eating a piece of his bread even if he says his own blessing of Hamotzi. Practically, the widespread customers like the latter opinion.[7]

______________________________________________________________________

[1] See Admur 274:4 “As they fulfill their obligation of Lechem Mishneh through hearing the blessing of Hamozti said over the Lechem Mishneh, and through then eating from that Lechem Mishneh”; Implication of Tosafus; M”B 167:83; Shaar Hatziyon 167:72; Ketzos Hashulchan 37 footnote 9; 82 footnote 6; Piskeiy Teshuvos 274:6; See also Admur 167:20 [Which could be understood to rule likewise that the participants must eat from the bread of the Lechem Mishneh, although possibly one can argue that it only refers to the prohibition to eat their bread prior to him eating]; 473:24 [From where it can be implied that eating from the same bread is not necessary, So long as they hear the blessing of Hamotzi from him]; See Admur 458:10 which writes that every participant is to receive from the middle Matzah

Other opinions: Some Poskim rule that it is not necessary to eat from the actual Matzah of the Lechem Mishneh to fulfill one’s obligation of Lechem Mishneh, and it rather suffices to simply hear him say the blessing over it. [Possible implication of Michaber 274:3, Admur 473:24, M”B 274:8; See Rav Tiyah Viyaal 26; Ashel Avraham Butchach 274; Eiyn Habedulach 61; Teshuvos Vehanhagos 1:259; Migdanos Eliyahu 1:147; Lehoros Nasan 6:9; Nesivos Adam 2:7; Piskeiy Teshuvos ibid footnote 82] According to this approach, there is no need for the leader of the Seder to distribute his Matzos to the participants if they each have a Kezayis of their own . 

[2] Implication of Admur ibid

[3] Admur 167:14

The reason: As Berov Am Hadras Melech. [Admur 167:18]

[4] Admur 167:18 regarding Hamotzi; Admur 619:8 regarding Shehechiyanu, Birchas Hallel and Lulav; M”B 213:12

The reason: As from the letter of the law a person is allowed to exclude himself from the group and say his own blessing rather than to fulfill his obligation with another, and since people are accustomed to talk and make an interval between the blessing said by the leader of the table and their eating, therefore it became accustomed for everyone to say their own blessing. [Admur 167:14]

[5] Implication of Admur 274:4; 473:24; Chayeh Adam Shabbos 7; Toras Chaim Sofer 213:8 in name of Chasam Sofer; Karban Nesanel on Rosh Arvei Pesachim 68 in name of manuscript Kesav; Ketzos Hashulchan 37 footnote 9 and 82 footnote 6; Piskeiy Teshuvos 274:6 footnote 76

[6] Possible understanding of Admur 167:18; Shut Tiya Viyal 26 that so was custom by Karban Nisanel; Minchas Shabbos in name of Ashel Avraham of Butchach 274

[7] Rebbe in Igros Kodesh 14:29, printed in Shulchan Menachem 2:83; Milameid Lehoil 1:24; See Daas Sofer 34; Lehoros Nasan 6:9; SSH”K 55 footnote 14; Shevet Halevi 8:241; Piskeiy Teshuvos 274:6 footnote 76