What is the transaction of the related party?
The transaction of the related party is a transaction related to enterprises conducted between two parties that have a mutual relationship. This relationship gives one side a control or influence on the other. Such transactions are legal, but they can create conflicts of interest and there are certain circumstances where they will not be allowed. Companies that are publicly traded are obliged to publish transactions of related parties in their financial statements. Special relations are used among societies and people in all these classes. Companies usually compile panels to decide the proposed transactions of related parties to determine whether the transaction is legal and justifiable.
things considered in deciding on the transaction of the related party include the advantage for society, as well as the other side, along with the value of the transaction and the nature of the transaction. If the company suspects that a conflict of interest can be created, for example, when ready to conclude a contract with a supplier in a transaction with a related party orIt would consider prices with other retailers, it will not go through the transaction. Likewise, if transactions seem to be illegal business practices, the company will not move forward. Companies also want to avoid scandals, so they can decide to vote on the proposed transaction, even if it is legal if people feel that people can suspect unsuitability.
If the panel determines that the transaction of the related party is legal and can provide the transaction to be carried out in the best interest of the company. Certainly there are cases where transactions of related parties offer the best business for the company and are beneficial for shareholders. Transaction information is recorded in accounting notes on the company's books so that people who check the financial statements can clearly understand the nature of the transaction.
Company without reporting can be involved in transactions with related parties. Small businesses often use the offers offered by people with whom they have relationships and inGuile kindness by hiring and promoting these people. These practices are sometimes criticized, especially in small communities where it may be difficult to penetrate into certain areas of the business community due to rooted habits and practices.