Sept 01, 2010 (LBO) - The Sri Lankan bourse has tightened rules on disclosure requirements in relation to related party transactions of listed firms, saying in a statement that some transactions need immediate disclosure.
The Colombo Stock Exchange said that from September 01, 2010 listed firms would have to make immediate disclosure of related party transactions exceeding 10 percent of the equity or five percent of the total assets, whichever is lower.
The stock exchange said the Securities and Exchange Commission, the capital markets regulator, had directed the CSE to amend the listing rules on disclosure requirements in relation to related party transactions of listed firms.
"The SEC views transactions which cumulatively or individually exceed 10 percent of equity or five percent of the total assets of the company as price sensitive and important to shareholders," the statement said.
"As such, an immediate disclosure of such transactions is required."
Disclosures required are details of investments and amounts due from related parties, including date of transaction, name of related party and relationship with the party, amount and terms of the transaction, and its rationale, the statement said.
The move came in the wake of mounting concern over delays in disclosures that gave rise to fears of abuse or manipulation under the previous rules.
The CSE also said that under its continuing listing requirements listed firms would have to disclose in their annual reports related party transactions exceeding 10 percent of the equity or five percent of the total assets, whichever is lower along with details.
Recurrent related party transactions in the ordinary course of business could be estimated and grouped together although any deviations from the original announcement would have to be disclosed immediately, the CSE said.
source - www.lbo.lk
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