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Glossary · PSX term

Related-party transaction.

A related-party transaction is a deal between a company and a connected party, such as its owners or affiliates.

Definition

Because these deals are not strictly arm's-length, they must be disclosed and approved under SECP rules to protect minority shareholders. Investors watch them for signs of value leaking to insiders.

Worked example

A company buying supplies from a firm owned by its directors is a related-party transaction that must be disclosed.

Related on PSX Clarity

Minority shareholder

Securities and Exchange Commission of Pakistan (SECP)

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