AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
Related Party Disclosures
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....tionships described in paragraph 3. 3. This Standard deals only with related party relationships described in (a) to (e) below: (a) enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the reporting enterprise (this includes holding companies, subsidiaries and fellow subsidiaries); (b) associates and joint ventures of the reporting enterprise and the investing party or venturer in respect of which the reporting enterprise is an associate or a joint venture; (c) individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of any such individual; (d) key management personnel and relatives of such personnel; and (e) enterprises over which any person described in (c) or (d) is able to exercise significant influence. This includes enterprises owned by directors or major shareholders of the reporting enterprise ....
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....ts present information about the holding and its subsidiaries as a single reporting enterprise. 9. No disclosure is required in the financial statements of statecontrolled enterprises as regards related party relationships with other state-controlled enterprises and transactions with such enterprises. Definitions 10. For the purpose of this Standard, the following terms are used with the meanings specified: 10.1 Related party - parties are considered to be related if at any time during the reporting period one party has the ability to control the other party or exercise significant influence over the other party in making financial and/or operating decisions. 10.2 Related party transaction - a transfer of resources or obligations between related parties, regardless of whether or not a price is charged. 10.3 Control (a) ownership, directly or indirectly, of more than one half of the voting power of an enterprise, or (b) control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in case of any other enterprise, or ....
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....t a director if any of the following conditions is satisfied: (a) a person cannot be appointed as director without the exercise in his favour by that enterprise of such a power as aforesaid; or (b) a person s appointment as director follows necessarily from his appointment to a position held by him in that enterprise; or (c) the director is nominated by that enterprise; in case that enterprise is a company, the director is nominated by that company/subsidiary thereof. (ii) the governing body of an enterprise that is not a company, if it has the power, without the consent or the concurrence of any other person, to appoint or remove all or a majority of members of the governing body of that other enterprise. An enterprise is deemed to have the power to appoint a member if any of the following conditions is satisfied: (a) a person cannot be appointed as member of the governing body without the exerci....
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.... directors of the company is accustomed to act, are usually considered key management personnel. Explanation A non-executive director of a company is not considered as a key management person under this Standard by virtue of merely his being a director unless he has the authority and responsibility for planning, directing and controlling the activities of the reporting enterprise. The requirements of this Standard are not applied in respect of a non-executive director even if he participates in the financial and/or operating policy decisions of the enterprise, unless he falls in any of the categories in paragraph 3 of this Standard. The Related Party Issue 15. Related party relationships are a normal feature of commerce and business. For example, enterprises frequently carry on separate parts of their activities through subsidiaries or associates and acquire interests in other enterprises - for investment purposes or for trading reasons - that are of sufficient proportions for the investing enterprise to be able to control or exercise significant influence on the financial and/or operating decisions of its investee. 16. Without related party disclosures, there is a g....
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.... borrowings, because of the fiduciary nature of their relationship with the enterprise. 21. Name of the related party and nature of the related party relationship where control exists should be disclosed irrespective of whether or not there have been transactions between the related parties. 22. Where the reporting enterprise controls, or is controlled by, another party, this information is relevant to the users of financial statements irrespective of whether or not transactions have taken place with that party. This is because the existence of control relationship may prevent the reporting enterprise from being independent in making its financial and/or operating decisions. The disclosure of the name of the related party and the nature of the related party relationship where control exists may sometimes be at least as relevant in appraising an enterprise s prospects as are the operating results and the financial position presented in its financial statements. Such a related party may establish the enterprise s credit standing, determine the source and price of its raw materials, and determine to whom and at what price the product is sold. 23. If there have been transactio....
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....ty except when seperate disclosure is necessary for an understanding of the effects of related party transactions on the financial statements of the reporting enterprise. Explanation Type of related party means each related party relationship described in paragraph 3 above. 27. Disclosure of details of particular transactions with individual related parties would frequently be too voluminous to be easily understood. Accordingly, items of a similar nature may be disclosed in aggregate by type of related party. However, this is not done in such a way as to obscure the importance of significant transactions. Hence, purchases or sales of goods are not aggregated with purchases or sales of fixed assets. Nor a material related party transaction with an individual party is clubbed in an aggregated disclosure. Explanation (a) Materiality primarily depends on the facts and circumstances of each case. In deciding whether an item or an aggregate of items is material, the nature and the size of the items(s) are evaluated together. Depending on the circumstances, either the nature of the size of the item could be the determining factor. As regards size, f....