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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References in periodicals archive ?
This includes the reporting of related-party transactions, the creation of a new risk bureau and expanded examination powers for the central bank."
In particular, we note that the proposed transaction agreement includes a "majority of the minority" vote requirement, which we believe serves an important role in protecting the interests of minority shareholders in related-party transactions."
Authorities had reported breaches at the firm, such as the failure to report related-party transactions, untimely disclosures and a compensation system that did not meet regulatory requirements.
disregarded entity to apply for a federal employer identification number and retain permanent records regarding related-party transactions.
If the intent is to protect the minority shareholders, this is adequately addressed in Recommendation 2.7, which provides for adopting a policy and system governing related-party transactions, and in Recommendation 3.5, which requires establishing a related-party transactions committee.
The notion that related-party transactions require heightened scrutiny has a long history.
The Public Company Accounting Oversight Board (PCAOB) adopted a new auditing standard and amendments requiring auditors to pay close attention to related-party transactions and significant unusual transactions, as well as a company's financial relationships and transactions with its executive officers when under-taking audits.
* The complexity and risks associated with recognition and disclosure of related-party transactions are significant.
Affiliates of the Evangelical Council for Financial Accountability (ECFA) have one year to comply with a new standard for setting compensation and addressing related-party transactions.
Despite this, the IRS found that the IRC Section 36(c) (5) exception that excludes related-party transactions incorporated the IRC Section 267(b)(6) exclusion for transactions between a fiduciary and a beneficiary of the same trust.
It also takes into account the firm's related-party transactions, accompanied by the inherent risk related to the construction market niche, the agency noted.