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Indian Accounting Standard (Ind AS) 24
Related Party Disclosures
(This Indian Accounting Standard includes paragraphs set in bold type and plain type,
which have equal authority. Paragraphs in bold type indicate the main principles.).
1 The objective of this Standard is to ensure that an entity’s financial statements
contain the disclosures necessary to draw attention to the possibility that its
financial position and profit or loss may have been affected by the existence of
related parties and by transactions and outstanding balances, including
commitments, with such parties.
2 This Standard shall be applied in:
(a) identifying related party relationships and transactions;
(b) identifying outstanding balances, including commitments, between an
entity and its related parties;
(c) identifying the circumstances in which disclosure of the items in (a)
and (b) is required; and
(d) determining the disclosures to be made about those items.
3 This Standard requires disclosure of related party relationships, transactions
and outstanding balances, including commitments, in the consolidated and
separate financial statements of a parent or investors with joint control of, or
significant influence over, an investee presented in accordance with Ind AS
110,Consolidated Financial Statements, or Ind AS 27, Separate Financial
Statements. This Standard also applies to individual financial statements.
4 Related party transactions and outstanding balances with other entities in a group
are disclosed in an entity’s financial statements. Intragroup related party
transactions and outstanding balances are eliminated, except for those between an
investment entity and its subsidiaries measured at fair value through profit or loss,
in the preparation of consolidated financial statements of the group.
4A Related party disclosure requirements as laid down in this Standard do not apply
in circumstances where providing such disclosures would conflict with the
reporting entity’s duties of confidentiality as specifically required in terms of a
statute or by any regulator or similar competent authority.
4B In case a statute or a regulator or a similar competent authority governing an
entity prohibits the entity to disclose certain information which is required to be
disclosed as per this Standard, disclosure of such information is not warranted.
For example, banks are obliged by law to maintain confidentiality in respect of
their customers’ transactions and this Standard would not override the obligation
to preserve the confidentiality of customers’ dealings.
Purpose of related party disclosures
5 Related party relationships are a normal feature of commerce and business. For
example, entities frequently carry on parts of their activities through subsidiaries,
joint ventures and associates. In those circumstances, the entity has the ability to
affect the financial and operating policies of the investee through the presence of
control, joint control or significant influence.
6 A related party relationship could have an effect on the profit or loss and financial
position of an entity. Related parties may enter into transactions that unrelated
parties would not. For example, an entity that sells goods to its parent at cost
might not sell on those terms to another customer. Also, transactions between
related parties may not be made at the same amounts as between unrelated parties.
7 The profit or loss and financial position of an entity may be affected by a related
party relationship even if related party transactions do not occur. The mere
existence of the relationship may be sufficient to affect the transactions of the
entity with other parties. For example, a subsidiary may terminate relations with a
trading partner on acquisition by the parent of a fellow subsidiary engaged in the
same activity as the former trading partner. Alternatively, one party may refrain
from acting because of the significant influence of another—for example, a
subsidiary may be instructed by its parent not to engage in research and
8 For these reasons, knowledge of an entity’s transactions, outstanding balances,
including commitments, and relationships with related parties may affect
assessments of its operations by users of financial statements, including
assessments of the risks and opportunities facing the entity.
9 The following terms are used in this Standard with the meanings specified:
A related party is a person or entity that is related to the entity that is
preparing its financial statements (in this Standard referred to as the
(a) A person or a close member of that person’s family is related to a
reporting entity if that person:
(i) has control or joint control of the reporting entity;
(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting
entity or of a parent of the reporting entity.
(b) An entity is related to a reporting entity if any of the following
(i) The entity and the reporting entity are members of the same
group (which means that each parent, subsidiary and fellow
subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity
(or an associate or joint venture of a member of a group of
which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other
entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of
employees of either the reporting entity or an entity related to
the reporting entity. If the reporting entity is itself such a plan,
the sponsoring employers are also related to the reporting
(vi) The entity is controlled or jointly controlled by a person
identified in (a).
(vii) A person identified in (a)(i) has significant influence over the
entity or is a member of the key management personnel of the
entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part,
provides key management personnel services to the reporting
entity or to the parent of the reporting entity.
A related party transaction is a transfer of resources, services or obligations
between a reporting entity and a related party, regardless of whether a price
Close members of the family of a person are those family members who may be
expected to influence, or be influenced by, that person in their dealings with
the entity including:
(a) that person’s children, spouse or domestic partner, brother, sister, father
(b) children of that person’s spouse or domestic partner; and
(c) dependants of that person or that person’s spouse or domestic partner.
Compensation includes all employee benefits (as defined in Ind AS 19,
Employee Benefits) including employee benefits to which Ind AS 102, Share-
based Payments, applies. Employee benefits are all forms of consideration
paid, payable or provided by the entity, or on behalf of the entity, in
exchange for services rendered to the entity. It also includes such
consideration paid on behalf of a parent of the entity in respect of the entity.
(a) short-term employee benefits, such as wages, salaries and social security
contributions, paid annual leave and paid sick leave, profit-sharing and
bonuses (if payable within twelve months of the end of the period) and
non-monetary benefits (such as medical care, housing, cars and free or
subsidised goods or services) for current employees;
(b) post-employment benefits such as pensions, other retirement benefits,
post-employment life insurance and post-employment medical care;
(c) other long-term employee benefits, including long-service leave or
sabbatical leave, jubilee or other long-service benefits, long-term
disability benefits and, if they are not payable wholly within twelve
months after the end of the period, profit-sharing, bonuses and deferred
(d) termination benefits; and
(e) share-based payment.
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly, including any director (whether executive or
otherwise) of that entity.
Government refers to government, government agencies and similar bodies
whether local, national or international.
A government-related entity is an entity that is controlled, jointly controlled or
significantly influenced by a government.
The terms ‘control’ and ‘investment entity’, ‘joint control’ and ‘significant
influence’ are defined in Ind AS 110, Ind AS 111, Joint Arrangements, and
Ind AS 28, Investments in Associates and Joint Ventures, respectively and are
used in this Standard with the meanings specified in those Ind ASs.
10 In considering each possible related party relationship, attention is directed to the
substance of the relationship and not merely the legal form.
11 In the context of this Standard, the following are not related parties:
(a) two entities simply because they have a director or other member of key
management personnel in common or because a member of key
management personnel of one entity has significant influence over the
(b) two joint venturers simply because they share joint control of a joint
(c) (i) providers of finance,
(ii) trade unions,
(iii) public utilities, and
(iv) departments and agencies of a government that does not control,
jointly control or significantly influence the reporting entity,
simply by virtue of their normal dealings with an entity (even though they
may affect the freedom of action of an entity or participate in its decision-
(d) a customer, supplier, franchisor, distributor or general agent with whom an
entity transacts a significant volume of business, simply by virtue of the
resulting economic dependence.
12 In the definition of a related party, an associate includes subsidiaries of the
associate and a joint venture includes subsidiaries of the joint venture. Therefore,
for example, an associate’s subsidiary and the investor that has significant
influence over the associate are related to each other.
13 Relationships between a parent and its subsidiaries shall be disclosed
irrespective of whether there have been transactions between them. An entity
shall disclose the name of its parent and, if different, the ultimate controlling
party. If neither the entity’s parent nor the ultimate controlling party
produces consolidated financial statements available for public use, the name
of the next most senior parent that does so shall also be disclosed.
14 To enable users of financial statements to form a view about the effects of related
party relationships on an entity, it is appropriate to disclose the related party
relationship when control exists, irrespective of whether there have been
transactions between the related parties. This is because the existence of control
relationship may prevent the reporting entity from being independent in making
its financial and operating decisions. The disclosure of the name of the related
party and the nature of the related party relationship where control exists may
sometimes be at least as relevant in appraising an entity’s prospects as are the
operating results and the financial position presented in its financial statements.
Such a related party may establish the entity’s credit standing, determine the
source and price of its raw materials, and determine to whom and at what price
the product is sold.
15 The requirement to disclose related party relationships between a parent and its
subsidiaries is in addition to the disclosure requirements in Ind AS 27 and Ind AS
112, Disclosure of Interests in Other Entities.
16 Paragraph 13 refers to the next most senior parent. This is the first parent in the
group above the immediate parent that produces consolidated financial statements
available for public use.
17 An entity shall disclose key management personnel compensation in total and
for each of the following categories:
(a) short-term employee benefits;
(b) post-employment benefits;
(c) other long-term benefits;
(d) termination benefits; and
(e) share-based payment.
17A If an entity obtains key management personnel services from another entity
(the ‘management entity’), the entity is not required to apply the
requirements in paragraph 17 to the compensation paid or payable by the
management entity to the management entity’s employees or directors.
18 If an entity has had related party transactions during the periods covered by
the financial statements, it shall disclose the nature of the related party
relationship as well as information about those transactions and outstanding
balances, including commitments, necessary for users to understand the
potential effect of the relationship on the financial statements. These
disclosure requirements are in addition to those in paragraph 17. At a
minimum, disclosures shall include:
(a) the amount of the transactions;
(b) the amount of outstanding balances, including commitments, and:
(i) their terms and conditions, including whether they are secured,
and the nature of the consideration to be provided in
(ii) details of any guarantees given or received;
(c) provisions for doubtful debts related to the amount of outstanding
(d) the expense recognised during the period in respect of bad or doubtful
debts due from related parties.
18A Amounts incurred by the entity for the provision of key management
personnel services that are provided by a separate management entity shall
19 The disclosures required by paragraph 18 shall be made separately for each
of the following categories:
(a) the parent;
(b) entities with joint control of, or significant influence over, the entity;
(e) joint ventures in which the entity is a joint venturer;
(f) key management personnel of the entity or its parent; and
(g) other related parties.
20 The classification of amounts payable to, and receivable from, related parties in
the different categories as required in paragraph 19 is an extension of the
disclosure requirement in Ind AS 1, Presentation of Financial Statements, for
information to be presented either in the balance sheet or in the notes. The
categories are extended to provide a more comprehensive analysis of related party
balances and apply to related party transactions.
21 The following are examples of transactions that are disclosed if they are with a
(a) purchases or sales of goods (finished or unfinished);
(b) purchases or sales of property and other assets;
(c) rendering or receiving of services;
(e) transfers of research and development;
(f) transfers under licence agreements;
(g) transfers under finance arrangements (including loans and equity
contributions in cash or in kind);
(h) provision of guarantees or collateral;
(i) commitments to do something if a particular event occurs or does not
occur in the future, including executory contracts1 (recognised and
(j) settlement of liabilities on behalf of the entity or by the entity on behalf of
that related party; and
(k) management contracts including for deputation of employees.
22 Participation by a parent or subsidiary in a defined benefit plan that shares risks
between group entities is a transaction between related parties (see paragraph 42
of Ind AS 19).
23 Disclosures that related party transactions were made on terms equivalent to those
that prevail in arm’s length transactions are made only if such terms can be
24 Items of a similar nature may be disclosed in aggregate except when separate
disclosure is necessary for an understanding of the effects of related party
transactions on the financial statements of the entity.
24A Disclosure of details of particular transactions with individual related parties
would frequently be too voluminous to be easily understood. Accordingly, items
of a similar nature may be disclosed in aggregate by type of related party.
However, this is not done in such a way as to obscure the importance of
significant transactions. Hence, purchases or sales of goods are not aggregated
with purchases or sales of fixed assets. Nor a material related party transaction
with an individual party is clubbed in an aggregated disclosure.
1 Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets, defines executory contracts as
contracts under which neither party has performed any of its obligations or both parties have partially
performed their obligations to an equal extent.
25 A reporting entity is exempt from the disclosure requirements of paragraph
18 in relation to related party transactions and outstanding balances,
including commitments, with:
(a) a government that has control or joint control of, or significant
influence over, the reporting entity; and
(b) another entity that is a related party because the same government
has control or joint control of, or significant influence over, both the
reporting entity and the other entity.
26 If a reporting entity applies the exemption in paragraph 25, it shall disclose
the following about the transactions and related outstanding balances
referred to in paragraph 25:
(a) the name of the government and the nature of its relationship with the
reporting entity (ie control, joint control or significant influence);
(b) the following information in sufficient detail to enable users of the
entity’s financial statements to understand the effect of related party
transactions on its financial statements:
(i) the nature and amount of each individually significant
(ii) for other transactions that are collectively, but not individually,
significant, a qualitative or quantitative indication of their
extent. Types of transactions include those listed in paragraph
27 In using its judgement to determine the level of detail to be disclosed in
accordance with the requirements in paragraph 26(b), the reporting entity shall
consider the closeness of the related party relationship and other factors relevant
in establishing the level of significance of the transaction such as whether it is:
(a) significant in terms of size;
(b) carried out on non-market terms;
(c) outside normal day-to-day business operations, such as the purchase and
sale of businesses;
(d) disclosed to regulatory or supervisory authorities;
(e) reported to senior management;
(f) subject to shareholder approval.
Note: This Appendix is not a part of the Indian Accounting Standard. The purpose of this
Appendix is only to bring out the major differences, if any, between Indian Accounting Standard
(Ind AS) 24 and the corresponding International Accounting Standard (IAS) 24, Related Party
Disclosures, issued by the International Accounting Standards Board.
Comparison with IAS 24, Related Party Disclosures
1. In the Ind AS 24, disclosures which conflict with confidentiality requirements of
statute/regulations are not required to be made since Accounting Standards can not
override legal/regulatory requirements. (Paragraphs 4A and 4B of Ind AS 24).
2. Paragraph 24A has been included in the Ind AS 24. It provides additional clarificatory
guidance regarding aggregation of transactions for disclosure.
3. Different terminology is used in this standard, eg, the term ‘balance sheet’ is used instead
of ‘Statement of financial position’.
4. Paragraph 14 has been modified to explain the rationale for disclosing related
party relationship when control exists.
5. In paragraph 21 an example of related party transaction ‘(k) management
contracts including for deputation or employees’ has been added.
6. ‘Definition of close members of the family of a person’ in paragraph 9 has been
amended to include brother, sister, father and mother in the category of family
members who may be expected to influence, or be influenced.