BC18 The definition of a related party in IAS 24 was widely considered to be too complex and difficult to apply in practice. The Board noted that the existing definition of a related party had weaknesses: it was cumbersome and included several cross-references that made it difficult to read (and to translate). Therefore, the 2007 and 2008 EDs proposed revised definitions.
BC19 In revising the definition, the Board adopted the following approach:
(a) When an entity assesses whether two parties are related, it would treat significant influence as equivalent to the relationship that exists between an entity and a member of its key management personnel. However, those relationships are not as close as a relationship of control or joint control.
(b) If two entities are both subject to control (or joint control) by the same entity or person, the two entities are related to each other.
(c) If one entity (or person) controls (or jointly controls) a second entity and the first entity (or person
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