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Nisha Sharma posted an Question
June 15, 2021 • 14:31 pm 30 points
  • UGC NET
  • Commerce

Please xplain me related party transactions

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  • Priya gulani Best Answer

    Examples of related party transactions include those between: A parent entity and its subsidiaries Subsidiaries of a common parent An entity and trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of the entity’s management An entity and its principal owners, management, or members of their immediate families Affiliates. Transactions between related parties commonly occur in the normal course of business. Examples of common transactions with related parties are: Sales, purchases, and transfers of real and personal property Services received or furnished, such as accounting, management, engineering, and legal services Use of property and equipment by lease or otherwise Borrowings, lendings, and guarantees Maintenance of compensating bank balances for the benefit of a related party Intra-entity billings based on allocations of common costs Filings of consolidated tax returns.

  • Rucha rajesh shingvekar

    What is related party transaction?company entering into contracts and arrangements with related party as follows:sale, purchase or supply of any goods or materials,selling or otherwise disposing of, or buying, property of any kind; leasing of property of any kind; availing or rendering of any services;appointment of any agent for purchase or sale of goods, materials, services or property;such related party 2019s appointment to any office or place of profit in the company, its subsidiary company or associate company; and underwriting the subscription of any securities or derivatives thereof, of the company.What is/are related party? A related party as per section 2(76) of The Companies Act, 2013, in reference to a company is:-a director or his relative; Key Managerial Personnel or his relative; firm, in which a director, manager or his relative is a partner; private company in which a director or manager [or his relative] is a member or director; a public company in which a director or manager is a director [and holds] along with his relatives, more than two per cent of its paid-up share capital;any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager; any person on whose advice, directions or instructions a director or manager is accustomed to act; any body corporate which is. a holding, subsidiary or an associate company of such company; . a subsidiary of a holding company to which it is also a subsidiary; or an investing company or the venturer of the company;Now, you must be thinking what is Key Managerial personnel, they are as following officers of the company:-the Chief Executive Officer or the managing director or the manager;the company secretary;the whole-time director; the Chief Financial Officer; such other officer, not more than one level below the directors who is in whole-time employment, designated as key managerial personnel by the Board;Note relative here means:-related to Director and Key Managerial Personnel as a member of the same HUF, husband, wife, father, step father, mother, step mother, son, step son, son wife, daughter, daughter husband, brother, step brother, sister, step sister. What transactions it covers? As covered in first question it covers, A company entering into contracts and arrangements with related party as follows: sale, purchase or supply of any goods or materials; selling or otherwise disposing of, or buying, property of any kind; leasing of property of any kind; availing or rendering of any services; appointment of any agent for purchase or sale of goods, materials, services or property; such related party’s appointment to any office or place of profit in the company, its subsidiary company or associate company; and underwriting the subscription of any securities or derivatives thereof, of the company.

  • Priya gulani

    In business, a related party transaction is a transaction which takes place between two parties who hold a pre-existing connection prior to the transaction. 

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