Relationship
This query is : Resolved
17 February 2014
please tell whether these companies are related companies:-
suppose company-A : Shareholding
father - 82% and rest others
In Company-B : Shareholding
with his two sons and daughter in laws
In company-C , these two brother holds share
co-B purchases from co-A
Co-C purchases from co-B
RELATIONSHIP OF COMPANY A&B and CO-B&C
suppose company-A : Shareholding
father - 82% and rest others
In Company-B : Shareholding
with his two sons and daughter in laws
In company-C , these two brother holds share
co-B purchases from co-A
Co-C purchases from co-B
RELATIONSHIP OF COMPANY A&B and CO-B&C
21 July 2025
Great question! Let's break down the relationship between Company A, B, and C based on the shareholding and family ties you described.
Given:
Company A: Major shareholder is Father (82%) + others.
Company B: Shareholding mainly by two sons and daughter-in-laws of the Father.
Company C: Shares held by the two brothers (the sons).
Transactions:
Company B purchases from Company A.
Company C purchases from Company B.
Analyzing the Relationships:
1. Company A and Company B
Family relationship: Father (major shareholder of A) and his sons + daughters-in-law (shareholders of B).
Control / Influence: Since the Father owns 82% in A, and his children/daughters-in-law own B, the family members have significant control or influence over both companies.
Conclusion:
They are related companies due to common control/influence through family members.
Under Accounting Standard (AS) 18 on Related Party Disclosures, relatives of key management personnel or major shareholders are considered related parties.
2. Company B and Company C
Both owned by the two brothers (sons).
This shows common control/influence.
Conclusion:
Company B and Company C are related companies as they have common major shareholders (brothers).
3. Company A and Company C
Father controls A; sons control C.
Since sons are close family members of Father, they are considered relatives.
This implies that Company A and Company C are also related companies due to family relationship and control/influence.
Summary Table
Companies Reason for Relationship Related Party Status?
A & B Father controls A, Sons & daughters-in-law control B (family control) Yes
B & C Both controlled by brothers Yes
A & C Father controls A, sons control C (family relation) Yes
Practical Implications:
All transactions between these companies need to be disclosed under AS-18 (Related Party Disclosures).
Transactions should be at arm’s length.
Proper board approvals and disclosures are advisable to avoid regulatory issues.
Given:
Company A: Major shareholder is Father (82%) + others.
Company B: Shareholding mainly by two sons and daughter-in-laws of the Father.
Company C: Shares held by the two brothers (the sons).
Transactions:
Company B purchases from Company A.
Company C purchases from Company B.
Analyzing the Relationships:
1. Company A and Company B
Family relationship: Father (major shareholder of A) and his sons + daughters-in-law (shareholders of B).
Control / Influence: Since the Father owns 82% in A, and his children/daughters-in-law own B, the family members have significant control or influence over both companies.
Conclusion:
They are related companies due to common control/influence through family members.
Under Accounting Standard (AS) 18 on Related Party Disclosures, relatives of key management personnel or major shareholders are considered related parties.
2. Company B and Company C
Both owned by the two brothers (sons).
This shows common control/influence.
Conclusion:
Company B and Company C are related companies as they have common major shareholders (brothers).
3. Company A and Company C
Father controls A; sons control C.
Since sons are close family members of Father, they are considered relatives.
This implies that Company A and Company C are also related companies due to family relationship and control/influence.
Summary Table
Companies Reason for Relationship Related Party Status?
A & B Father controls A, Sons & daughters-in-law control B (family control) Yes
B & C Both controlled by brothers Yes
A & C Father controls A, sons control C (family relation) Yes
Practical Implications:
All transactions between these companies need to be disclosed under AS-18 (Related Party Disclosures).
Transactions should be at arm’s length.
Proper board approvals and disclosures are advisable to avoid regulatory issues.
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