Related business refers to the business between the controlling shareholders, actual controllers, directors, supervisors and senior managers of the company and the enterprises directly or indirectly controlled by them, as well as other businesses that may lead to the transfer of the company's interests.
An affiliated enterprise refers to an enterprise that has direct or indirect control or significant influence on other enterprises. Related enterprises are related enterprises. Affiliates can be represented by holding companies and subordinate companies in law.
What does the related party transaction include?
According to Article 4 of State Taxation Administration of The People's Republic of China Announcement on Improving Related Party Reporting and Information Management in the Same Period (State Taxation Administration of The People's Republic of China Announcement No.2016 No.42), related party transactions mainly include:
1. Transfer of the right to use or ownership of tangible assets. Tangible assets include commodities, products, houses and buildings, vehicles, machinery and equipment, tools and appliances.
2. Transfer of financial assets. Financial assets include accounts receivable, bills receivable, other accounts receivable, equity investment, debt investment and assets formed by derivative financial instruments.
3. Transfer of the right to use or ownership of intangible assets. Intangible assets include patents, non-patented technologies, trade secrets, trademarks, brands, customer lists, sales channels, franchise rights, government licenses, copyrights, etc.
4. financing. The funds include all kinds of long-term and short-term borrowing funds (including the group fund pool), guarantee fees, all kinds of interest-bearing prepayments and deferred payments.
5. Labor transaction. Labor services include market research, marketing planning, agency, design, consulting, administration, technical services, contract research and development, maintenance, legal services, financial management, auditing, recruitment, training, centralized procurement, etc.
What are the adverse effects of related business transactions on the company?
Related party transactions may increase the business risk of the company, make the company fall into financial difficulties, and may lead to bad debt risk. For example, if the major shareholder provides guarantee, funds or the major shareholder occupies the company's funds in other ways, it will bring potential financial risks to the company; If unfair transactions are made with major shareholders and related personnel, the company's profits will be reduced. In addition, related business transactions will also affect the company's independent operation ability and reduce the company's ability to resist external risks. Too much related business will reduce the competitiveness and independence of the company and make the company rely too much on related parties, especially the major shareholders. For example, some companies mainly purchase raw materials and sell products to related parties, and their operational autonomy is subject to many restrictions.