tengdurviðkomandi

Tengdurviðkomandi is an Icelandic term that translates directly to "connected party" or "related party" in English. It is a legal and accounting concept used to describe individuals or entities that have a relationship with another party, such as a company or a transaction, that could potentially influence their actions or decisions. This relationship is typically defined by factors like ownership, control, or close personal ties.

In a business context, identifying connected parties is crucial for transparency and to prevent conflicts of interest. Transactions between connected parties are often scrutinized to ensure they are conducted at arm's length, meaning at fair market value, as if the parties were unrelated. This helps to prevent the manipulation of financial statements or the unfair transfer of assets. Regulatory bodies and accounting standards often require disclosure of transactions involving connected parties.

The definition of a connected party can vary slightly depending on the specific legal or regulatory framework. Generally, it includes entities that are controlled by the same individual or group, parent and subsidiary companies, key management personnel and their close family members, and sometimes significant shareholders. Understanding who constitutes a connected party is essential for compliance, risk management, and maintaining the integrity of financial reporting.