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Specific related party exclusions
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.
OmniPro comment
It is clear from the exclusions above, 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.
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