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The disclosure of related parties
Background
EMIA applicants for assistance must disclose information on related parties where the one party can exercise significant/insignificant/substantial/insubstantial influence over another party in making financial and operating decisions or can exercise control or joint control over the other party.
Influence and control
Significant influence means participation in the financial and operating decisions of the other party, but does not necessarily mean having direct control over those policies. This significant influence can be exercised, inter alia, by representation on the board of directors of the other party, participation in the policy-making process, by material inter-company transactions, the interchange of managerial personnel or dependence on technical information. Substantial influence can be gained through the ownership of shares, legislaton or agreement. Control means ownership, directly or indirectly, of more than one-half of the voting power in other entities; or the right to exercise a significant portion of the voting power in another party and the power to direct, by statute, the policy and decisions of the other party.
Types of related parties
The following are regarded as related parties:
- Entities, which, directly or indirectly, through one or more intermediaries, are controlled by or can exercise control over, or are under common control with the reporting entity (for example, parent companies, subsidiaries and fellow subsidiaries)
- Quasi subsidiaries may also qualify as related parties
- Associated companies
- Jointly-controlled entities with jointly controlled assets and/or operations
- Individuals, including close family members, owning, directly or indirectly, such an interest in the voting power in the reporting entity that significant or insignificant influence can be exercised over the entity; close members of the family of an individual are those that may be expected to influence or to be influenced by that person in their dealings with the enterprise
- Key management personnel of the entity, that is, people responsible for the planning, directing and control of the reporting entity. This includes directors and officers and close family members
- Entities in which a significant/insignificant interest in the voting power is held, either directly or indirectly, by individuals, key personnel and close family members, or entities over which the individual or key personnel member can exercise significant influence; it includes entities owned by directors or significant shareholders in the reporting entity, as well as entities that share key personnel with the reporting entity
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