1. Investor’s Perspective:
   Investors invest in a business on the assumption that it aims to maximize its own profits for the benefit of its own shareholders. This means that all transactions have been negotiated at arm’s length between willing and informed parties. The existence of related parties may encourage directors to make decisions for the benefit of another entity at the expense of their own shareholders. This can be done actively by selling goods and services cheaply to related parties or by buying goods and services at an above-market price. It can also happen when directors choose not to compete with a related party or offer guarantees or collateral for other parties’ loans.
2. Importance during Business Sale:
   Disclosure is particularly important when a business is being sold. It may receive custom, supplies, services, or general help and advice from family or group companies. When the company is sold, these benefits may be withdrawn. Shareholders and potential investors need to be informed of material related party transactions in order to make informed investment and stewardship decisions.

(4 marks)