The Board considered a formal proposal to add a project to the Board's technical agenda to amend IAS 24 with respect to certain transactions between state-controlled entities and among entities when one entity is a subsidiary and the other is an associate of the same parent/ investor. The staff noted that the proposal had already been discussed with the SAC and the Trustees, as required by the Board's Due Process Handbook.

Transactions between state-controlled entities

Board members asked for clarification of the scope of the possible amendments. It was noted that there was no proposal to limit or exempt disclosures of transactions between the State and any State-owned business entities (that is, parent-subsidiary or investor-investee transactions). The project would explore whether and to what extent disclosure accommodations could be made with respect to transactions among entities which are owned by the State, or in which the State has significant influence.

The Board agreed to add this aspect of the project to its technical agenda. It was noted that a blanket exemption was unlikely to command the support of the Board, but that restricting disclosure to 'off-market' transactions might be a possibility. However, it was too early to conclude how the Board might approach the issue.

Transactions between two related parties of an entity

This issue relates to what the requirements of IAS 24 are when:

• (a) an entity has both subsidiaries and associates that transact with each other; and
• (b) the associate is the reporting entity.

Board members expressed various views about this issue. One noted that transactions between the subsidiary and the associate should be within the scope of IAS 24, but saw difficulty with enforcing this. Other Board members disagreed, noting that if the associate's procedures for identifying related parties were adequate, the associate should be able to identify the parent's subsidiaries. At the margins, there will be situations in which the associate would not know it is transacting with a related party, but it must still make its best efforts to identify them.

It was suggested that, as part of the plan for addressing this part of the project, the staff should contact those SAC members that are professional users of financial statements and who had expressed concerns about the current definition of related parties.

The Board agreed to add this aspect of the project to its technical agenda.