Tesla may have to designate the government as a “related party”
In Tesla’s latest annual report, Musk’s position at the Department of Government Efficiency was mentioned as a risk factor, in that it was one of the ways in which the company’s leader “does not devote his full time and attention to Tesla.” Next time, Tesla may have to name the government as a “related party,” which could mean more visibility for shareholders into how much of its money Tesla gets from the government, because it would have to declare significant transactions between the two, The Wall Street Journal reports.
US accounting rules list a definition of related parties as ones that “can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.” Experts that WSJ spoke with said Tesla fits the description.
If that designation occurs, Tesla would join the hallowed ranks of American International Group, General Motors, Fannie Mae, and Freddie Mac, which gained the distinction due to government bailouts.
US accounting rules list a definition of related parties as ones that “can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.” Experts that WSJ spoke with said Tesla fits the description.
If that designation occurs, Tesla would join the hallowed ranks of American International Group, General Motors, Fannie Mae, and Freddie Mac, which gained the distinction due to government bailouts.
