New related party transaction rules issued

The Colombo Stock Exchange has issued a new circular relating to related party transactions which is to be followed on a mandatory basis by all listed companies with effect from 1 January next year.

Under Section 9 of the CSE Listing Rules a related party transaction will be defined as a transfer of resources, services or obligations between related parties regardless of whether a price is charged.

The listed entity now has to appoint a RPT (Related Party Transactions Review) committee under CSE listing rules and in respect of certain RPTs the company should obtain shareholder approval via a special resolution. The circular also added that listed entities should disclose details on the RPTs in the annual report while adding that some RPTs may trigger immediate market disclosure.

The entire set of rules and regulations which constitutes of exempted related party transactions is included under Section 9 of the CSE Listing Rules, which is published on the CSE website.