IND AS 24 : RELATED PARTY DISCLOSURE

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IND AS 24 : RELATED PARTY DISCLOSURE

(I) Related Parties

A. A related party includes:
1. Persons (Individuals) or Entities which are related to the Reporting Entity
in the prescribed manner.

PERSONS (INDIVIDUALS)
(INCLUDING CLOSE FAMILY MEMBERS) (NOTE – 1)

Key Managerial
Control Joint Control Significant Influence Personnal (KMP)
(Note 2)

Power to direct Participation in policy

Shared power which KMP of
relevant activities making processes
generally arises from (a) Reporting Entity
(Generally at > 50% (Generally at > 20%
specific agreements (b) Parent Entity
stake) stale)

Note 1

Close family members include Spouse, Domestic Partner, Children of Spouse /

Domestic Partner, Brother, Sisters, Parents or any other Member who can influence
or be influenced

Note 2

Key Managerial Personal (KMP)

They are persons having the responsibility for planning, directing and controlling the
activities of the enterprise. KMP includes All Directors (Independent / Executive /
Non-Executive) and other Function Heads like CEO, COO, CFO etc.

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 IND AS 24 : RELATED PARTY DISCLOSURE

Entity Relationships
An entity is related if any of the following conditions apply:
(a) Members of the same group (Group includes Parent, Subsidiary, Sub-
Subsidiary and Fellow subsidiaries which are under common control)
Joint Ventures and Associates are not included in the Group

S1 S2 P
P.
R.

S3 S4 S1 S2
R.P.

(b) A joint Venture / Associate of the Reporting Entity or Another Group

member of the Reporting Entity.

R.P.
P P

R.P.

J1 A1 S1 S2

.
R.P

J1 A1

R.P.
S1 S2

.
R.P

P.
J1 R. J2

J3 J4

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 IND AS 24 : RELATED PARTY DISCLOSURE

An Associate includes subsidiaries of Associate and a joint venture includes

subsidiaries of a joint venture.

P P

S1 S1

S2 No S2
R.P.
R.P.

A1 A1

A2 A3

(c) Both Entities are Joint venture of the same Third Party (Third Party
has not been specifically defined on whether it refers to individual entities or
group. We have considered that the entities are related based on the same
third party group concept)

P P Q

J1 J2 J1 J2
R.P. No
R.P.

S1 S2

J1 J2
R.P.

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 IND AS 24 : RELATED PARTY DISCLOSURE

(d) One entity is a J.V. and Another entity is an Associate of the same
third party [Even in this case, we have applied the same third party group
concept].

P P Q P

R.P. NO
J1 A1 J1 A1 S1 S2
R.P.

R.P.
J1 A1

Summary

X Y

S1 S2 : R.P. (a)

S1 J1 : R.P. (b)

S1 A1 : R.P. (b)

J1 J2 : R.P. (c)

J1 A1 : R.P. (d)

A1 A2 : NO R.P.

(e) An entity which is controlled / Jointly controlled by a person (individual) as

defined above and another entity is controlled / Jointly controlled / Significantly
Influenced / Has KMP, as the same person or his close family member.

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 IND AS 24 : RELATED PARTY DISCLOSURE

Family
MR. X MRS. X
Spouse
Control / Control / Joint Control /
Joint Control Significant Influence / KMP

R.P.
A Ltd B Ltd

Family
MR. X MRS. X
Spouse

S.I / KMP S.I / KMP

NO R.P.
A Ltd B Ltd

(f) Post-employment plans set up by the entity for employee welfare. E.g.
Recognized / Unrecognized Provident Fund.
(g) An entity which provides key management services to the reporting entity

(II)
A. NOT RELATED PARTIES
1. Co – Associates

NO R.P.
A1 A2

2. Co-venturers

NO R.P.
CV1 CV2

J1

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 IND AS 24 : RELATED PARTY DISCLOSURE

3. Two entities with common directors / common AMP

MR. X

KMP KMP

A Ltd B Ltd
NO R.P.

4. Providers of finance , example – Bank

5. Trade Unions
6. Major Customers / Suppliers / Distributors / Agents

(Refer Q. 1, 2, 3, 4)

(II)
B. Related Party Report (To be disclosed in notes)
The related party report has 2 parts:
(a) Name and Nature of Relationships
(b) Disclosure of Transactions and Outstanding Balances

NAME AND RELATIONSHIPS

Joint Control / Significant

Control Relationship
Influence / KMP
(E.g.: Parent, Subsidiary)
Relationship
(E.g.: Joint venture /
Associates

1. Disclosure needed
irrespective of the Disclosure needed only if
transactions during the transaction have happened
year during the year
2. Additionally, we need to
identify:
(a) Immediate Parent
(b) Ultimate Parent
(c) N  ext Most Senior
Parent (Note 1)

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 IND AS 24 : RELATED PARTY DISCLOSURE

Note 1

Next Most Senior Parent

This is a parent closest to the reporting entity which prepares consolidated accounts
for public use. (E.g.: Listed Companies)

Private - Ultimate

Listed S1

Listed S2 - Next Most Senior

Private S3 - Immediate

S4

S2 is the next most senior parent for S4

This concept applies only if immediate parent / ultimate parent does not prepare
accounts for public use.

(B) Transactions and Outstanding Balances

All transactions with related parties whether appearing in Financial Statements or not
along with outstanding balances need to be disclosed.

KEY POINTS

(1) A related party relationship is considered to exist if there was a relationship

at any point during the year. Further, disclosure for transactions should be
given only for those transactions which have happened when the related party
relationship was in existence.
(2) The management is required to disclose all transactions will related parties
irrespective of their size or irrespective of the fact that they are entered at
arm’s length or not. Management can voluntarily disclose the terms at which
transactions have happened.

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 IND AS 24 : RELATED PARTY DISCLOSURE

(3) Compensation paid to KMP should be segregated into:

• Short Term Benefits (Salaries)
• Post-Employment Benefits (Gratuity, PF)
• Termination Benefits (VRS, Retrenchment)
• Other Long-Term Benefits (Residual)
• Share Based Payments
(4) Transactions can be disclosed for each related party separately. Alternatively,
a reporting entity is permitted to aggregate similar transactions into groups of
similar relationships.
[E.g.: Grouping the relationship as subsidiaries, Associates etc.]

Sample Related Party Report

(Notes to Accounts)
(A)
Name Relationship
P Ltd Parent
S Ltd Subsidiary
A Ltd Associate
J Ltd Joint Venture
MR X K.M.P
. .
. .
. .

(B) Transactions and Outstanding Balances

Transactions Subsidiaries JV Associates KMP
Sale of goods XX XX XX XX
Purchase XX XX XX XX
Rendering of Service XX XX XX XX
Machinery Purchased XX XX XX XX
Loans Given XX XX XX XX
Investment XX XX XX XX
Guarantees Given XX XX XX XX
.
.
.
Outstanding Balances
Debtors XX XX XX XX
Creditors XX XX XX XX
Loans XX XX XX XX
Prepaid Expenses XX XX XX XX
Outstanding Expenses XX XX XX XX
Investments XX XX XX XX
.
.
.

(Refer Q. 5, 6, 7, 8, 9, 11, 12)

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 IND AS 24 : RELATED PARTY DISCLOSURE

(III) Exemption for Government and Government Related Entities

An entity is exempted from the disclosure of transactions and outstanding balances with:

t control
Go ve rn m en t: wh ich has control / Join
(a) 
ce over the entity
/ significant influen

the government
ich is a re la te d pa rty merely because
wh
(b) Another Entity l / Joint control / signi
ficant influence
ct ly ha s co nt ro
directly or indire
over both entities. n for
we ve r, a di sc lo su re needs to be give
Ho
ment
(i) Name of the govern rnment and the
of Re la tio ns hi p between the gove
(ii)  Nature
reporting entity.

lose a
na lly , an en tit y can voluntarily disc
Additio
(c)  ment
tio n wi th th e Go vernment / govern
transac help in
d en tit ie s if it be lieves that it would
relate ents
g of Financial Statem
better understandin

(Refer Q. 10)

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