Key Management Personnel

The Board considered the following Illustrative Example:

A person, X, holds a 100 per cent investment in Entity A and is a member of the key management personnel of Entity C. Entity B holds a 100 per cent investment in Entity C.

In Entity C's financial statements, Entity A is a related party of Entity C because X controls Entity A and is a member of the key management personnel of Entity C.

Entity A is also a related party of Entity C if X is a member of the key management personnel of Entity B.

Further, Entity A is a related party of Entity C if X holds only joint control, significant influence or significant voting power over Entity A.

Under the current version of IAS 24, in Entity A's separate financial statements, Entity C is not a related party of Entity A. The Board agreed that IAS 24 should be amended such that, in Entity A's separate financial statements, Entity C should be included as a related party.

Disclosure

The Board agreed that a new sub-paragraph 17A(b) should be reworded to state something along the lines of: A reporting entity is exempt from the disclosure requirements of paragraph 17 in relation to an entity that: (a) is a related party only because the reporting entity is controlled or significantly influenced by a state and the other entity is controlled or significantly influenced by that state; and (b) there are no indicators that the reporting entity influenced or was influenced by the entity.

Definition of a related party transaction

The Board agreed that transactions or commitments, which have a future settlement date, should be included in the definition of a related party transaction and that an example should be added to IAS 24 paragraph 20 to clarify this.

Comment period

The Board agreed that the comment period should be 90 days rather than 120 days. This was in response to strong representations from jurisdictions most affected by the proposed amendment. Those jurisdictions wanted the amendment to be in place in time for 2007 financial year ends. In addition, the Board noted that every effort should be made to accommodate this request, even at the expense of obligations under the Memorandum of Understanding with respect to Discussion Papers (Standards-level documents have priority).