Normally, in the notes of the Accounts in financial statement, we often see terms like related parties. This article looks at what really is the term called Related Parties.

Related parties basically falls into two categories:

An INDIVIDUAL is related to the company if the individual

1. Has directly or indirectly, control or joint control or significant influence over the company or

2. Is a member of the key management personnel of the company or

3. Is a close member of the family of the individual in (1) & (2)

An ENTITY is related to the company if the entity

1. Has directly or indirectly, control or joint control or significant influence over the company or
2. is controlled by or under common control with the company or
3. is an associate or jointly controlled entity of the company or
4. is controlled, jointly-controlled or significantly influenced by an individual related to the company.

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