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Transparency in transactions
Related party transactions are not always at market rates — an owner lending money, or a company buying services from a board member's firm. A register makes these visible and ensures they are properly recorded and fair.
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Legal & accounting requirements
IAS 24 and equivalent standards require companies to disclose related parties and their transactions in the annual accounts. Without a register, disclosures can be incomplete — and auditors will notice.
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Avoiding conflicts of interest
Board members and executives can face decisions that touch their own interests. A register helps identify potential conflicts early and ensures the right process is followed — including recusal where required.
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Tax compliance & scrutiny
Tax authorities pay close attention to related party transactions, as they can be used to shift profits or reduce tax through pricing. A register supports transfer pricing analyses and demonstrates that commercial terms are arm's length.
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Auditing & internal control
Auditors always ask who the related parties are. Having a maintained register saves time, reduces the risk of errors, and makes the audit process significantly more efficient for everyone involved.
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Better oversight for management
A register gives management a clear, up-to-date picture of who is connected to the company and where risk may lie — supporting informed decision-making and sound corporate governance.