One of the key pillars of Corporate Governance is maintaining transparency in all details. This applies to concluding any transaction with a related party to highlight the impact of this transaction and the associated risks on the business entity for presentation to the company’s shareholders’ general assembly or the board of directors before concluding the transaction. This supports the rational decision-making process.
Therefore, the Capital Markets Authority in the State of Kuwait obligates all listed and licensed companies to submit a report on any transactions with a related party.
What are the governing references that companies are required to submit Reports on Deals with Related Parties?
In accordance with Module Fifteen, “Corporate Governance,” Article 7-7 stipulates that:
The Company shall assign an independent expert, such as an Asset Valuator or Investment Advisor, to report to the general assembly or the Board of Directors, as the case may be, on any transaction between the company and any Related Party or any arrangement whereby each party enters into any project or financing asset where the value of the transaction or arrangement equals 5% or more of the total assets of the company, or if the transaction or the arrangement had a Material Effect on the company’s financial statements, provided that such report is submitted before the transaction is approved or the arrangement stipulated in this article.
The assigned expert must be objective and impartial in preparing the report required in this Article.
What is the added value to business entities from preparing Reports on Deals with Related Parties?
- Compliance with regulatory requirements of the Capital Markets Authority.
- Identifying the fair value of the transaction and its impact on the financial performance of the company.
- Defining and identifying the potential risks that may arise as a result of concluding the transaction.
Why Baker Tilly Kuwait?
Baker Tilly Kuwait is distinguished by specialist professional experience and offers the following characteristics carrying added value to our clients as follows:
- Baker Tilly has a license as an Investment Advisor from the Capital Markets Authority;
- A global consulting firm with a local presence in the State of Kuwait;
- Professional team with in-depth experience in providing investment consultancy services in Kuwait.
What are the services provided by Baker Tilly Kuwait?
Preparation of deals with related parties report