Related parties
In one sentencePersons or entities that control the business or have significant influence over it, or are closely connected with it, such as owners, managers, their relatives and their companies.
Simply put
When the company buys from a company owned by its manager, the price may not be the market price. That is why international standard IAS 24 requires you to identify who the related parties are and monitor your dealings with them.
They usually include: the parent, subsidiaries and associates, influential owners, key management, their close family members, and entities they control.
Example
A contracting establishment owned by one person rents its equipment from a company owned by his son: the leasing company is a related party, and the lease is a transaction that must be disclosed.
Don't confuse it with
Related party disclosuresThe parties are the entities themselves, and the disclosure is what is written about them and their transactions in the notes.