AS-18 query

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jassi (Querist)
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26 May 2010 hello......

my query is

Suppose a co. say A LTD. 's managing director is also M.D of another Co. Say B ltd.

This means while reporting for A ltd. , B Ltd. will be its related party.

Now let C ltd. be subsi of B ltd. ....... Whether it will be Related party for A ltd.

Pls reply

CA Kishore Tallam

CA Kishore Tallam (Expert)
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27 May 2010 No. As per para 3 of AS 18
(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 and enterprises that have a member of key management in common with the reporting enterprise.
Since C Ltd (sub of B Ltd) does not fall in any of the above category, its not a related party assuming that MD is not a KMP in C Ltd & does not have any signifcant influence through voting power in C Ltd.

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