10. What is a Related Party Transaction?
OMIF - Technical old
Related parties exist when one party has the ability to exercise, directly or indirectly, control, joint control or significant influence over the other. Two or more parties are related when they are subject to common control, joint or common significant influence. Related parties also include management and immediate family members.
A related party transaction is a transfer of economic resources or obligations between related parties, or the provision of services by one party to a related party, regardless of whether any consideration is exchanged. The parties to the transaction are related prior to the transaction. When the relationship arises as a result of the transaction, the transaction is not one between related parties.
Control of an enterprise is the continuing power to determine its strategic operating, investing and financing policies without the cooperation of others.
Joint control of an economic activity is the contractually agreed sharing of the continuing power to determine its strategic operating, investing and financing policies.
Significant influence over an enterprise is the ability to affect the strategic operating, investing and financing policies of the enterprise.
[This definition is quoted directly from the CICA Standards & Guidance Collection paragraph 3840.03.]