Last Updated : 2019-01-22 16:20:44

Apps Advertising Home Delivery Feedback

SEC tightens related party transaction rules

13 December 2013 08:17 am - 0     - {{hitsCtrl.values.hits}}

A A A

The Securities and Exchange Commission yesterday tightened the rules on related party transactions by introducing a detailed best practices code with effect from January 1, 2014, aiming to safeguard minority shareholders and put in place an internal control mechanism in listed firms.

However, the adoption of the best practices code would be on voluntary basis during the first two years of the introduction. But from 2016, the adoption of the best practices code becomes mandatory for all listed firms.

The companies which will adopt the best practices code from January 2014 on a voluntary basis for an initial period of two years will be exempted from complying with the disclosure requirements stipulated in Listing Rule 7.6 (XVI) and item 29 of Appendix 8A, which will be repealed in 2016.

However, the provisions in the best practices code appear to be more detailed and demanding compared to disclosure provisions in the Listing Rule 7.6 (XVI).

For instance, the best practices code proposes to set up a Related Party Transaction Review Committee within the firm to confirm that a related party transaction is not against the company’s interest and mention whether the review committee obtained an opinion from an independent expert before forming its view.

Further shareholder approval by a way of a special resolution is required under the new best practices code if a listed entity or its subsidiary buys or disposes 1/3 of the total assets of either of them to a related party.

  Comments - 0


Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment


Singling out of Rishad Bathiudeen as a political target

The orchestrated political campaign by the Mahinda Rajapaksa-led opposition i

TWISTS AND TURNS in the Dr. Shafi controversy

The sterilization charges against Dr. Seigu Shihabdeen Mohamed Shafi from the

Islamic State in Iraq and Syria (ISIS) An in-depth look at ISIS

As the people and Government of Sri Lanka reel with shock and grief in the wa

Mahela declines to be part of Sri Lankan team Management at cricket World Cup

Weeks after guiding Mumbai Indians to their fourth IPL title--his second in t