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.
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