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Query in related party

puja ragavi (B.com, CA., CS.,) (90 Points)

14 July 2012

I would like to know whether transactions with the trust should be disclosed as a related party transaction in the Annual Report ( say if the company has done contributions towards a trust where the key personnel is the trustee in that trust). should this be taken as a related party transaction?

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6 Replies

Ankit CA and CS (Manager - Accounts) (204 Points)
Replied 14 July 2012

Puja,

Does KMP plays a role in functioning of the trust??

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bhavik mehta (C.A.) (526 Points)
Replied 14 July 2012

As per my opnion,

Yes it is.

because, any person who can affect /influence or in capacity of to influence the transaction betwwn two parties are to be tretated as related parties.

and as such key person is the trustee in the Trust, transaction is to be treated as related party transaction.

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SIDDHARTH KOTHARI (N.A) (280 Points)
Replied 14 July 2012

HI ,

AS PER AS-18, KEY MANAGEMENT PERSONNEL AND OF SUCH PERSONNEL ARE THOSE PERSONS WHO HAVE AUTHORITY AND RESPONSIBILIY FOR PLANNING ,DIRECTING AND CONTROLLING THE ACTIVITIES OF THE REPORTING ENTERPRISE AND ENTERPRISE OVER WHICH THE INDIVIUAL OR KEY MANAGEMENT PERSONNEL DESCRIBED ABOVE IS ABLE TO EXERCISE SIGNIFICANT INFLUENCE.THIS INCLUDES THE ENTRPRISES OWNED BY THE DIRECTORS OR MAJOR SHARE HOLDERS OF THE REPORTING ENTERPRISE.

NOW, SO ANY OF THE KEY MANAGEMENT PERSONNEL OR THE RELETIVE THEROF HAVE SIGNIFICANT INFLUENCE IN THE TRUST IN WHICH THE COMPANY HAS MADE THE DONATION .THEN AS-18 WILL APPLY AND YOU ARE RQUIRED TO MAKE REPORTING OF THE SAME IN THE ANNUAL REPORT.

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