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Comment by andrejuseu | Hacker News Reader

Same in Lithuania, not a problem, if price for renting is like market price, else, it would be interesting to local authorities.

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How is this not a problem? There is a huge conflict of interest in decisions about location, rent negotiations, etc.

Is conflict of interest illegal?

I said 'problem', not 'illegal'. Other shareholders/boards/investors/employees should care.

Rent should be similar to market price for the region. Regarding location, the family wants the store to the be sucessfull for 2 reasons: (1) the rent period is going to be longer and (2) they own the retailer and want to invest in viable stores!

If rent were the same, then it wouldnt happen as often, because any slightly better deal will make the owner of the property lose out.

Rent on self-owned is definitely higher than market price. It has to be for the transaction to make sense.

As somebody mentioned, if you own a building as a shareholder in new company, and you have more shareholders (not one shareholder), you can buy rent from it as long as price is in market.

Company rents office from other company, you can have as many companies as you want.

You are thinking about tax issues not issues of fiduciary duty. The market value issue is to make sure you’re not illegally funneling money between entities without proper taxation.

You generally couldn’t, for example, transfer significant wealth to a friend without high taxes by selling them something for a dollar When it’s market value is $10 million. This issue here is completely different.

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