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Dear Sir
Could you please assist me to understand the disclosure requirement of the following case:
Company A is the parent company (98% shareholdings) of Company C and Company B is a subsidiary of Company A which holds 2% shares of Company C. Company B paid dividend during the year to Company A and Company B, amounting to USD 98,000 and USD 2,000 respectively.
i) Do we need to disclose the transaction as a related party transaction in Company C’s financial statements?
ii) If disclosure is required then is it in relation to dividend payment to both Company A and Company B?
I have found the following para regarding this in IAS 24 which may be appropriate:
“A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.” (IAS 24, para 9)
Thanks in advance. Appreciate your time and effort.
Warm regards
MymoonUnder IAS 24, a related party is where there is a significant control or influence. 2% would not be considered significant I assume.
A disclosure is required between parents and subsidiaries whether a transaction has incurred or not. A disclosure will include the name of the parent and the ultimate control party.
If a related party transaction took place, a separate disclosure required in regards of the nature of relationship and details of transaction and any outstanding balances.
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