I am preparing a set of accounts for a limited co. (Co. A) where the majority shareholder is a local council and the minority shareholder is another Ltd company. The council has provided funding to Co. A as an interest bearing loan. The loan is material. In terms of disclosures under FRS 102 sec 33, it states that 'government departments and agencies' are not considered related parties. My question therefore should disclose the council as the provider of the loan at all in the notes? Alternatively I could disclose it in a fuller description of the loan in creditors. I have not come across this before so any advice would be appreciated. Many thanks
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Surely the fact that they are the majority shareholder trumps the fact that they are a government department?
Hi
If you've got a material loan from a majority shareholder then I'd say it's automatically an RPT that requires disclosure, notwithstanding that the shareholder concerned is a government body.
I think what Section 33 is trying to say is that for those entities which rely upon central or local government for their income (e.g. academy schools, or some charities which exist as outsourced providers) then those government bodies should not be classed as related parties. If you've got a government body that is actually the majority equity holder then I don't think you can get away from it being an RPT.