Related person

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PINTU JAT

PINTU JAT (Querist)

03 April 2014 what is tha share holding condition to be related person.

ADITYA

ADITYA (Expert)

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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