| Q1. |
State-controlled entities
| a. |
Do you agree with the proposal to provide, in the
circumstances described in this exposure draft, an exemption for
entities controlled or significantly influenced by the state? If not,
why? What would you propose instead and why? The G100 supports
this proposal. However, if this is a principle to be applied the G100
believes that similar relief would be appropriate in respect of the
separate financial statements of companies within a consolidated group.
|
| b. |
Do you agree: (i) that an indicator approach is an
appropriate method for identifying when the exemption should be provided
for entities controlled or significantly influenced by the state; and
(ii) that the proposed indicators are appropriate?
If not, why? What would you propose instead and why?
The G100 considers that the proposed indicators are appropriate.
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|
| Q2. |
Definition of a related party
| a. |
The definition of a related party in IAS 24 does not include,
for a subsidiary’s individual or separate financial statements, an
associate of the subsidiary’s controlling investor. The Board has
decided that it should be included, and thus proposes to amend the
definition of a related party. The Board similarly proposes that when
the investor is a person, entities that are either significantly
influenced or controlled by that person are to be treated as related to
each other. Do you agree with this proposed amendment? If not, why? What
would you propose instead and why? The G100 supports the
proposal as it relates to subsidiaries but not in respect of entities
subject to significant influence. It is unreasonable to expect diverse
and large multinational organisations to track relationships and
transactions in respect of entities which are significantly influenced
by a person. In such entities it is a major task to identify all
entities that are subsidiaries and significantly influenced investees
without seeking to capture transactions between investees that are
significantly influenced. In addition, in view of the distant nature of
the relationships the information value of the disclosures is unlikely
to be meaningful and decision-useful to shareholders.
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| b. |
IAS 24 does not define associates of an entity as related parties.
However, when a person has significant influence over an entity and a
close member of the family of that person has significant influence over
another entity. IAS 24 defines those two entities as related parties.
The Board proposes to align the definition for both types of ownership
by excluding from the definition of a related party an entity that is
significantly influenced by a person and an entity that is significantly
influenced by a close member of the family of that person. Do you agree
with the proposed amendment? If not, why? What would you propose instead
and why? Yes.
|
| c. |
IAS 24 defines any entity over which a member of the key
management personnel of the reporting entity has control, joint control
or significant influence, or in which the member holds significant
voting power, as related to the reporting entity. However, the converse
is true. Thus, when the entity that a person controls, jointly controls
or significantly influences, or in which the person has significant
voting power, is the reporting entity and that person is a member of the
key management personnel of another entity, that other entity is not
defined as related to the reporting entity. The Board proposes to remove
this inconsistency by expanding the definition to encompass both
situations. Do you agree with the proposed amendment? If not, why? What
would you propose instead and why? Yes.
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| d. |
Do you agree with the proposal to clarify the definition of a
related party? Does the wording proposed capture the same set of related
parties as IAS 24 at present (except for the amendments described in (a)
– (c) above)? Do you agree that the proposed wording improves the
definition of a related party? If not, why? What would you propose
instead and why? Yes.
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