A FTSE100 Company Secretary writes...
When disclosing our list of related undertakings in the Notes to the Group Accounts, Schedule 4 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 makes reference to an exemption where the entity is not considered material. Namely, significant holdings in undertakings other than subsidiary undertakings and membership of certain undertakings. The term ‘materiality’ is not defined in the Companies Act 2006 and I would like to know how other companies have determined ‘materiality’ when deciding which entities to include?
A FTSE 250 Company replied: We look at the nature of the transaction which is taking place. It’s one of those disclosures where for a change it is not always based on the amount of the transaction. So, for example, if we have a transaction with a common director, which is not in the normal course of business, we would disclose this as a RPT. On the other hand, if we have a transaction which is at arms’ length and on typical market terms, we wouldn’t necessarily disclose this as a RPT. It is a fairly judgemental disclosure in this case too and if there was anything potentially contentious we would also run this by our auditors.