arm's length


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arm's length

adj. the description of an agreement made by two parties freely and independently of each other, and without some special relationship, such as being a relative, having another deal on the side or one party having complete control of the other. It becomes important to determine if an agreement was freely entered into to show that the price, requirements, and other conditions were fair and real. Example: if a man sells property to his son the value set may not be the true value since it may not have been an "arm's length" transaction. (See: contract)

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References in periodicals archive ?
The 'arm's length' standard is based on the OECD Guidelines and requires transactions between two or more related parties to be conducted on terms that would be applied had the parties been independent.
The new lens is said to meet 75% of the wearers' visual needs within arm's length. This is compared with the 59% match average from alternative premium progressive designs and makes it the highest match ever achieved by a progressive lens, Essilor highlighted.
In Canada, provisions to deal with such conduct include prohibitions against gifting to a "non-qualified donee", and intermediate sanctions for gifting to a "non-qualified donee" and for conferring undue benefits on someone not acting at arm's length from a charity.
Arm's length as described in the issuance refers to the process involved in handling the transaction as well as the economic terms of the transaction
One is the councils for surrendering public services to arm's length organisations but not obliging those companies to have transparency mechanisms in place.
Employees who are closely related to their employers are usually not dealing at arm's length. These relatives include a spouse or common-law partner, children, parents, and brothers and sisters of an owner.
The Timing Issues Draft suggests, however, that tax authorities should have a right to re-characterise buy/sell agreements into joint venture agreements, even if the buy/sell agreements are concluded at arm's length. In other words, it arrogates to the tax authorities the right to disregard a genuine arm's length agreement where such agreements are "uncertain" for one of the participants, a situation generally not observed in unrelated party dealings.
* Prior studies have argued and regularly found that cultural distance is negatively related to bilateral export flows, which are the sum of arm's length and intra-firm exports.
Transfer pricing and the arm's length principle in international tax law.
That is, although the court accepted that sharing the stock option costs would be inconsistent with the arm's-length standard, there were instances in which the law imposed a requirement that went beyond arm's length. Not surprisingly, the position that the arm's-length standard could be overridden was highly controversial.
Maxim Resources Inc (TSX VENTURE: MXM) (OTCBB: MXMSF) (Frankfurt:M5H) has entered into a binding letter agreement with arm's length third parties to purchase all of the outstanding shares of a private Trinidad based on-shore oil producer for USD10.0m in cash.
Under such circumstances the arm's length principle is preferred (Sekulic Grgic, 2005), according to which efforts are being made to determine a price agreed between independent subjects within a same or comparable transaction.