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Related-Party Transaction

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Related-Party Transaction
A transaction between two businesses that have a personal or other relationship. For example, a publicly-traded company may be inclined to hire a large, minority shareholder as a supplier. In small businesses, a company may hire the owner's brother-in-law to repair the driveway. Related-party transactions are legal, but create the potential for conflicts of interest. Thus, publicly-traded companies are required to report them on their 10-K forms.


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Most companies in Tunisia are involved in significant related-party transactions where disclosure remains limited, internal control procedures remain inefficient compared to western peers, and the concept of board independence has yet to be widely accepted.
In addition, the court disallowed Talbots' royalty and interest payment deductions for 2001 and 2002 for the related-party transaction.
The amendments also require an independent assessment of a related-party transaction before it is approved, said in the report.
 
 
 
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