CSE sets mandatory rules on Related Party Transactions

Dec 07, 2015 (LBO) – The Colombo Stock exchange has mandated the rules relating to Related Party Transactions by all Listed Companies from 01 January 2016.

Accordingly, section 9 of the CSE Listing Rules set out the relevant rules applicable in the event a listed entity enters into a related party transaction.


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The salient features of the said Rules: Definition of a “Related Party Transaction” (RPT) A Related Party Transaction (RPT) is a transfer of resources, services or obligations between Related Parties regardless of whether a price is charged. Related Party Transactions Review Committee (RPT Committee) The listed entity should appoint a RPT Committee. The Rules relevant to such Committee are stated under Rule 9.

2 of the CSE Listing Rules. Requirement for shareholder approval In respect of certain RPTs the company should obtain shareholder approval via a special resolution (Rule 9.1 of the CSE Listing Rules). Immediate Market Disclosures Some RPTs trigger an Immediate Market Disclosure (Rule 9.3 of the CSE Listing Rules). Disclosure in the Annual Report Listed companies should disclose details on the RPTs in the Annual Report (Rule 9.3.2 of the CSE Listing Rules). Exempted Related Party Transactions Certain identified RPTs do not fall within the ambit of section 9 Applicable only to equity listed companies The Rules set out under Section 9, shall only be applicable in the event the company has shares listed at the CSE