Related Party Disclosures (IAS 24)

Date recorded:

Review of redeliberations to date

The IASB reviewed a summary of the results of their redeliberations to date. One Board member expressed concern that he was not in a position, neither was it clear from the agenda paper, to determine (i) whether re-exposure would be necessary; and (ii) whether the redelibaerations has resulted in divergence between the IASB and the FASB with respect to related party disclosures. Although the IAS 24 project was not a convergence project, the IASB should, as a matter of courtesy, alert their US colleagues if amendments to IAS 24, which currently is largely consistent with the equivalent US standards, would result in that no longer being the situation. Other Board members noted that this would also be an issue with other jurisdictions.


Follow-up issues: State-controlled entities

The Board spent a considerable amount of time re-deliberating the exemption from disclosure under the Standard for State-controlled entities.

The Board appeared to agree that the presence of transactions not on arm's-length terms would be an indicator of influence. 'Arm's-length terms' are those terms, including price, that would apply if the transaction occurred between unrelated parties. Negotiated volume discounts similar to those that would be offered to other parties purchasing similar amounts would be arm's-length sales.

The Board also appeared to agree that the exemption being proposed would not be available if State influence was identified at either the transaction or entity level (see's reports for October 2007 and November 2007).

However, the status of these decisions was thrown in to doubt when the Board determined that, in some jurisdictions including China, the State often nominates one or more Board members. This fact alone seemed to indicate that the State would normally 'participate in the operating and financial decisions' of State-controlled entities and thus would always fail the exemption criteria developed.

The session ended in a degree of confusion and the staff will consult with interested parties and return to a subsequent meeting with revised proposals.

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