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Thanks for responding in the previous post mike. I was aware of that paragraph in ias 24…but im still not clear what your answer is to my question.
Q1
If a sale is made at less than market value to a related party , should the disclosure note state that?…yes or noQ2
If it does then it would negatively affect shareholders….but what about if its being sold to the shareholders of that same company?I answered question 1 – work on the principle that more is better – it’s more transparent.
But I don’t believe that it’s a mandatory requirement to state that the transaction was below market value … only to state the agreed value at which the transaction took place
As for question 2 … this is new – ie it wasn’t in your original post
“If it does then it would negatively affect shareholders” – yes! That’s WHY disclosure is required of the details of related party transactions. But I still don’t see a requirement for the directors to state that the transaction was at an undervalue. Just that the transaction took place and here are the details
“but what about if its being sold to the shareholders of that same company?”
ALL the shareholders? Or just selected shareholders? If it’s ALL the shareholders, that sounds like it’s a distribution of value … like a dividend
If it’s only selected shareholders … that sounds like it’s a potential fraud on the non-involved shareholders
OK?
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