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Example 1: Group exemption
In the group below all entities within the group can avail of the exemption contained in Section 33.1A in each of the entity sets of financial statements. Although Subsidiary D is not 100% owned by either Subsidiary A or B, it is still owned 100% within the group. Therefore any transactions between Subsidiary A, Subsidiary B, Subsidiary C and Subsidiary D do not have to be disclosed.
Example 2: Group exemption
The section 33.1A exemption does not apply as Parent A does not own 100% of Company B. Therefore all transactions will need to be disclosed in Company B’s entity financial statements. In the parent consolidated financial statements the balances will be eliminated on consolidation so there are no issues.
Example 2A: Close family members
Two companies, Company A is 100% owned by Mr Y and Company B is 25% owned by Mrs Y. Mr and Mrs Y are married.
In this case in the books of Company A, the transactions entered into with Company B are related party transactions as Mr X controls Company A and Mrs Y has a significant influence in Company B.
In the books of Company B the transactions entered into are not related party transactions as Mrs Y does not have control or joint control of Company B, Mrs Y only has a significant influence.
Example 3: Close family members
Two companies, Company A is 25% owned by Mr Y and Company B is 25% by Mrs Y. Mr and Mrs Y are married.
In this case in the books there is no related party issues as neither party have control or joint control.
Example 4: entities are members of a group (Section 33.2(b)(i))
A group exists where a company owns greater than 50% of the ordinary shares or where there is a right to control the board of directors. Any transactions entered into by any of the below companies are related party transactions. However as stated above, Section 33.1A allows an exemption where the companies are wholly owned subsidiaries. Therefore in this case, no disclosure is required for transactions entered into between Parent A, Subsidiary A and Subsidiary B in each of these financial statements. Disclosure of transactions entered into with Subsidiary C & D will need to be disclosed. In the financial statements of Subsidiary C & D, all transactions entered into with the other group companies and each other will need to be disclosed.
Example 5: (Section 33.2(b)(ii) & (iv)
In the below, all Companies are related parties in each of the separate financial statements.
Example 6: (Section 33.2(b)(iii)
In this instance all companies are related parties in each of the separate financial statements.
Example 7: (Section 33.2(b)(vi)
In the illustration below, Company A and B are related parties. If Mr A owned 100% of Company B, they would also be related parties.
Example 8: (Section 33.2(b)(vii)
Company A and Company B are related parties as Mr A has a significant influence over Company B. Company B is a related party of Company A as Mr A controls Company A (Section 33.2(b)(vi)). If in the above example Mr A did not have any ownership in Company B but was one of the key management personnel of Company B, then Company A & B would still be related parties.
Example 9: (Section 33.4A)
In the example below Company A, is related to Company B, C, E and G. Company A is related to company E by virtue of Section 33.4A i.e. Company E is a subsidiary of Company A’s associate.
From Company A’s perspective, Company D is not a related party as it does not have significant influence over Company D i.e. it only owns 10% (20%*50%) of Company C and Company C does not have a subsidiary (i.e. Company D is only a joint venture).
From Company D’s perspective, Company C & F are related. The other companies are not.
Example 10: Pension funds (Section 33.2(b)(v)
Company A enters into a lease on a property with a pension fund which is held for the benefit of its directors. In this case the rent paid for the use of the property is a related party transaction as Company A and the pension fund are related under Section 33.2(b)(v).
Example 11: Extract from notes to the financial statements
Parent and ultimate controlling party
The company is a wholly owned subsidiary of X Limited, a company incorporated in the XXXX. The ultimate controlling party of X Limited is Y Limited, which is the parent company of the smallest and largest group to consolidate these Financial Statements. Copies of Y Limited Consolidated Financial Statements can be obtained from the Secretary, XXXXX, Country.
OR
The ultimate controlling party is considered to be the board of directors of the company.
OR
The company is owned by a number of private shareholders and companies, none of whom own more than 10% of the issued share capital of the Company. Accordingly, there is no parent nor ultimate controlling party
OR
The holders of the ordinary shares in XXXX Limited are regarded as being the ultimate controlling party of the company.
Example 12: Extract from notes to the financial statements
All directors and certain senior employees who have authority and responsibility for planning, directing and controlling the activities of the company are considered to be key management personnel. The total remuneration in respect of these individuals was CUXXX (2014:CUXXX).
Example 13: Extract from the notes to the financial statements
Related party transactions
|
Sales to related party |
Purchases from related party |
Amounts owed from related party |
Amounts owed to related party |
|
|
|
CU |
CU |
CU |
CU |
|
Entities with control, joint venture or significant influence over the Company |
|
|
|
|
|
2015 |
– |
– |
– |
– |
|
2014 |
– |
– |
– |
– |
|
Entities over which the company has control, joint control or significant influence |
|
|
|
|
|
2015 |
– |
– |
– |
– |
|
2014 |
– |
– |
– |
– |
|
Entities providing key management personnel services |
|
|
|
|
|
2015 |
– |
– |
– |
– |
|
2014 |
– |
– |
– |
– |
Terms and conditions of transactions with related parties
Sales and purchases between related parties are made at normal market terms. Outstanding balances with entities are unsecured, interest free and cash settlement is expected within 30 days of invoice. A provision for bad debt has been created at the year-end for CU10,000 (2014: CUnil) against an amount due from an associate company.
Other related party transactions
AN Other, the director of the company, holds an interest in patents which are licensed to the company for the manufacture of certain machines. During the period, patent royalties of CUXXXX (2014: CUXXXX) were charged to the company in respect of the use of these patents. At 31 December 2015 an amount of CUXXXX was due from the directors (2014: CUXXXX amount due to the directors).
During the year the company was charged CUXXX (2014: CUXXX) by AN Other Limited for rental of the premises where the company operates. An amount of CUXXX (2014: CUXXX) was owed to AN Other Limited at the year end. AN Other Limited is related by virtue of common directors.
During the year the company paid expenses in the amount of CUXXXX (2014: CUXXXX) on behalf of an associate, Associate Limited. An amount of CUXXXX (2014: CUXXXX) remained outstanding from this company at the year end. A provision of CUXXXXX (2014: CUXXX) was provided against this balance at the 31 December 2015. The associate is related by virtue of common directors.
Key management personnel
All directors and certain senior employees who have authority and responsibility for planning, directing and controlling the activities of the company are considered to be key management personnel. The total remuneration in respect of these individuals was CUXXX (2014:CUXXX).
Guarantees
The company has not provided or benefited from any guarantees for any related party receivables or payables.
Example 13A: Disclosure of amounts due from/to group entities and related party balances including amounts due to/from directors
DIRECTORS REMUNERATION AND TRANSACTIONS
|
|
2015 |
2014 |
|
|
CU |
CU |
|
Remuneration |
|
|
|
Salary |
182,000 |
185,600 |
|
Pension Costs |
30,000 |
30,000 |
|
|
212,000 |
225,600 |
|
|
|
|
|
In respect of the highest paid director |
|
|
|
Remuneration |
100,000 |
100,000 |
|
Pension Costs |
20,000 |
20,000 |
|
|
|
|
|
Directors’ Loans |
Directors A |
Director B |
|
|
|
|
|
Opening Balance |
4,332 |
100,000 |
|
Repayments to directors |
9,301 |
– |
|
Advances from directors |
(1,000) |
– |
|
Closing balance |
12,633 |
100,000 |
The interest rate applied to this loan was X% per annum on a compound interest basis and is repayable on demand.
The maximum amount outstanding to directors during the year was CUxx,xxx. There was no writes off on this loan during the year (2014: CUnil). A provision of CUnil (2014:CUnil) was recognised against this balance at the year end
|
Debtors – amounts falling due within one year |
2015 |
2014 |
|
|
CU |
CU |
|
|
|
|
|
Trade debtors |
– |
– |
|
Prepayments and other debtors |
– |
– |
|
Corporation tax |
– |
– |
|
Value added tax |
– |
– |
|
Amounts due from directors (see note 1) |
– |
– |
|
Amounts due from group undertakings (see note XXX) |
– | – |
|
|
– |
– |
|
|
|
|
|
Creditors – amounts falling due within one year |
2015 |
2014 |
|
|
CU |
CU |
|
Bank overdraft and loans |
– |
– |
|
Trade creditors |
– |
– |
|
Accruals |
– |
– |
|
Income tax deducted under PAYE |
– |
– |
|
Pay related social insurance |
– |
– |
|
Amounts due to directors (see note XXX) |
– |
– |
|
Amounts due to group undertakings (see note XXX) |
– |
– |
|
Corporation tax |
– |
– |
|
Value added tax |
– |
– |
|
|
– |
– |
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