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Mr. X holds 51% in A Ltd. He is also a non-executive director of B Ltd. and has no other interest in B Ltd. Under Ind AS 24, A Ltd. and B Ltd. are:
ANot related — Mr. X must hold equity in both companies for the relationship to arise
BNot related — common directorship alone does not create a related-party relationship
CRelated parties, because Mr. X controls A Ltd. and is key management personnel of B Ltd.
DRelated only if A Ltd. and B Ltd. actually transact with each other in the period
Answer & Solution
Correct answer: C. Related parties, because Mr. X controls A Ltd. and is key management personnel of B Ltd.
Para 9(b)(vii) treats an entity as related when a person who controls the reporting entity is KMP of the other entity. Mr. X controls A Ltd. (51%) and is KMP of B Ltd. (a non-executive director qualifies as KMP). The para 11 exception about "common directorship alone" does not apply here because Mr. X also CONTROLS one of the entities.
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