03 April 2014
A person has to hold more than 50% of equity in order to become a related party. Please find below detailed explanation.
For the purpose of AS 18, 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 ofresources or obligations between related parties, regardless of whether or not a price is charged. 10.3 Control – (a) ownership, directly orindirectly, ofmore 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 (c) a substantial interest in voting power and the power toRelated Party Disclosures 275 direct, by statute or agreement, the financial and/or operating policies of the enterprise. 10.4 Significant influence - participation in the financial and/or operating policy decisions of an enterprise, but not control of those policies. 10.5 An Associate - an enterprise in which an investing reporting party has significant influence and which is neither a subsidiary nor a joint venture of that party. 10.6 A Joint venture - a contractual arrangementwhereby two or more parties undertake an economic activity which is subject to joint control. 10.7 Joint control - the contractually agreed sharingofpowerto govern the financial and operating policies of an economic activity so as to obtain benefits from it. 10.8 Key managementpersonnel- thosepersons who have the authority and responsibility for planning, directing and controlling the activities of the reporting enterprise. 10.9 Relative – in relation to an individual, means the spouse, son, daughter, brother, sister, father and mother who may be expected to influence, or be influenced by, that individual in his/her dealings with the reporting enterprise. 10.10 Holding company - a company having one or more subsidiaries. 10.11 Subsidiary - a company: (a) in which another company (the holding company) holds, either by itself and/or through one or more subsidiaries, more than one-half in nominal value of its equity share capital; or (b) of which another company (the holding company) controls, either by itself and/or through one or more subsidiaries, the composition of its board of directors. 10.12 Fellow subsidiary - a company is considered to be a fellow subsidiary of another company if both are subsidiaries of the same holding company.276 AS 18 10.13 State-controlled enterprise - an enterprise which is under the control of the Central Government and/or any State Government(s).
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