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33.2 Exclusions from Section 33 requirements – Wholly owned entities within the group.
33.2.1 Extract from FRS102: Section 33.1A.
33.3 Related party defined – Persons/Individuals.
33.3.1 Extract from FRS102: Section 33.2(a)
33.3.2.2 Persons of close members of that person’s family.
33.3.2.2.1 Control, joint control and significant influence.
33.3.2.2.2 Close family members defined.
33.2.2.3 Key management personnel
33.2.2.4 Examples of close family members.
33.4 Related party defined – Entities.
33.4.1 Extract from FRS102: Section 33.2 (b) and Section 33.4.
33.4.2.2.1 Entities are members of a group.
33.4.2.2.3 Both entities are joint venture of the same third party.
33.4.2.2.6 Transactions with a subsidiary of a joint venture or associate.
33.5 Specific related party exclusions.
33.5.1 Extract from FRS102: Section 33.3-33.4.
33.5.2.2 Relationships that are not related parties.
33.6.1 Disclosure of parent-subsidiary relationships.
33.6.1.1 Extract from FRS102: Section 33.5.
33.6.2 Disclosure of key management personnel compensation.
33.6.2.1 Extract from FRS102: Section 33.6 – Section 33.7.
33.6.2.2.1 Key management personnel defined.
33.6.2.2.2.1 Directors duties merely incidental and incurred by parent entity.
33.6.2.2.2.1.1 Possible disclosure in financial statements where directors duties are incidental
33.6.2.2.3 Sample key management personnel disclosure.
33.6.3 Disclosure of related party transactions.
33.6.3.1 Extract from FRS102: Section 33.8-33.14.
33.6.3.2.2 Rules on disclosure of items being on an arm’s length basis.
33.6.3.2.4 Examples of related parties to be disclosed.
33.6.3.2.5 Illustrations of the related parties required by Section 33.8 to 33.14 of FRS102.
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33.5 Specific Related Party Exclusions
33.5.1 Extract from FRS102: Section 33.3-33.4
33.3 In considering each possible related party relationship, an entity shall assess the substance of the relationship and not merely the legal form
33.4 In the context of this FRS, 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 other entity.
(b) Two venturers simply because they share joint control over a joint venture.
(c) Any of the following 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-making process):
(i) providers of finance;
(ii) trade unions;
(iii) public utilities; and
(iv) government departments and agencies.
(d) A customer, supplier, franchisor, distributor or general agent with whom an entity transacts a significant volume of business, merely by virtue of the resulting economic dependence.
33.5.2 OmniPro comment
33.5.2.1 Overview
It is clear from the exclusions stated in Section 33.4 of FRS102, that the substance of the relationship should be considered. Just because both companies have a director in common does not create a related party, the key question is whether that director can control/jointly control one or both companies. Where control exists, a related party relationship exists.
33.5.2.2 Relationships that are not related parties
As per Section 33.4 of FRS102 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 other entity.
(b) Two venturers simply because they share joint control over a joint venture.
(c) Any of the following 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-making process):
(i) providers of finance;
(ii) trade unions;
(iii) public utilities; and
(iv) government departments and agencies.
(d) A customer, supplier, franchisor, distributor or general agent with whom an entity transacts a significant volume of business, merely by virtue of the resulting economic dependence.
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Examples
Example 1: Wholly owned group exemption.
Example 3: Close family members.
Example 4: Close family members.
Example 5: entities are members of a group (Section 33.2(b)(I of FRS 102))
Example 7: Both entities are joint venture of the same third party (Section 33.2(b)(iii))
Example 10: Transactions with a subsidiary of a joint venture or associate.
Example 11: Pension funds (Section 33.2(b)(v)of FRS102)
Example 13: Extract from notes to the financial statements.
Example 14: Extract from notes to the financial statements.
Example 15: Extract from the notes to the financial statements.
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