non-arm's length transaction

Definition

A transaction involving a party that is controlled by another entity and does not act on its own behalf. The party sets aside independent interest in order to focus on the wishes of the controlling party. Non-arm's length transactions must involve at least one interested party that is concerned about the possible consequences of the transaction. Transactions involving family members, and parent companies and subsidiaries would not be considered non-arm's length transactions because the parties are acting independently. Opposite of arm's length transaction.

Use this term in a sentence

When companies who have had a previous relationship conduct business they are entering a non-arm's length transaction.

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nonagent nonassessable stock