Transaction Between the Company and A Related Party

As part of the Capital Markets Authority’s commitment to establishing policies and mechanisms for mitigating conflicts of interest and methods for addressing and managing them within companies under its supervision, the Executive Bylaws of Law No. 7 of 2010 regarding the establishment of the Capital Markets Authority and Regulation of Securities Activity, require that listed and licensed companies, when intending to enter into a transaction or arrangement with any related party, must prepare an independent report on such transaction or arrangement and submit it to the Board of Directors or the General Assembly.

What are the governing references that require companies to submit a Report on the Transaction or Arrangement with Related Parties?

In accordance with the CMA’s Executive Bylaws, 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 same article also defined the professional responsibility of the entity preparing the report, stating the following:

The assigned expert must be objective and impartial in preparing the report required in this Article, and rely on the latest available information, in addition to complying with the provisions of Appendix (1) “Minimum Requirements for the Valuation or Assessment of the Impairment of Assets” of Module Eleven (Dealing in Securities) of these Bylaws.

What is the added value to business entities from preparing a Report on Transaction or Arrangement with Related Parties?

• Compliance with the regulatory requirements of the Capital Markets Authority.
• Achieving transparency and disclosure regarding conflicts of interest.
• Assisting the Board of Directors or the General Assembly in making informed decisions.

Why Baker Tilly Kuwait?

Baker Tilly is distinguished by specialist professional experience and offers the following characteristics, carrying added value to our clients as follows:

• Has a license as an Asset Valuator and Investment Advisor from the Capital Markets Authority;
• Has a professional team with in-depth experience in providing investment advisory and asset valuation services in Kuwait.
• A global consulting firm with a local presence in the State of Kuwait.

What are the services provided by Baker Tilly Kuwait?

Preparation of an Independent Report to Determine the Fair Value of a Transaction or Arrangement Between the Company and Related Parties