Baker Tilly in Kuwait: Deals with Related Parties… A regulatory requirement enhancing transparency, compliance and risk management
Transparency in concluding business deals and transactions is a key pillar of Corporate Governance. This requirement applies to any transaction with a related party to highlight the impact of any such transaction and associated risks on a company
KUWAIT CITY, Kuwait, Oct.14, 2022 /PRNewswire-PRWeb/ -- In this context, Baker Tilly in Kuwait explained that according to the Executive Regulations of Law No. 7 of 2010, as amended, specifically Article 7-7, Kuwait Capital Market Authority requires listed companies and licensed persons to submit a report issued by an independent expert, such as an Asset Valuer or Investment Advisor, on a deal with any related party where the value of the transaction or arrangement equals 5% or more of the total assets of the company.
Baker Tilly in Kuwait added that such a report is intended to eliminate any conflict of interest in transactions and deals with related parties, ensure compliance with regulatory mandates, and enhance transparency and risk management practices.
It is noteworthy that Baker Tilly in Kuwait is a CMA-Licensed Investment Advisor that provides the service of preparing mandatory reports on deals with related parties in conformity with the regulatory requirements.
Utilizing its capabilities and experience in this domain, Baker Tilly in Kuwait adopts a recognized methodology and approach in preparing the above-mentioned report, including but not limited to the requirements of local legislations, international standards including IAS 24, and best practices.
What is a related party?
As per the Executive Regulations of Kuwait Capital Markets Authority, a related party is defined as follows:
"a party is considered related to a company if: 1. that party has direct or indirect control over the company;2. the party is a Subsidiary;3. the party is a member of the same Group to which the company is a party;4. the party is a Board Member of the company or a member of its executive management;5. the person is a Relative of a related party referred to in paragraph (1) or (4);6. The party is a company controlled by or under joint control or significant influence of the related parties referred to in paragraphs (4) and (5) hereof through their direct or indirect significant voting power.
When determining Related Parties, the provisions of the Law, Bylaws, and International Accounting Standard No. 24 and amendments thereto shall be taken into account".
Furthermore, IAS 24 defines related parties as follows:
"A related party is a person or an entity that is related to the reporting entity:
- A person or a close member of that person's family is related to a reporting entity if that person has control, joint control, or significant influence over the entity or is a member of its key management personnel.
- An entity is related to a reporting entity if, among other circumstances, it is a parent, subsidiary, fellow subsidiary, associate, or joint venture of the reporting entity, or it is controlled, jointly controlled, or significantly influenced or managed by a person who is a related party".
What is a related party transaction?
A related party transaction is a transfer of resources, services, or obligations between a reporting entity and a related party, regardless of whether a price is charged. IAS 24 requires an entity to disclose key management personnel compensation in total and by category as defined in the Standard.
About Baker Tilly Kuwait
Baker Tilly in Kuwait is an independent member of the Baker Tilly International network based in the UK, ranked amongst the top 10 global accounting networks. The firm provides auditing & assurance, and tax services as well as consulting & advisory services in accounting, investment, management, financial, actuarial, and information technology to assist several sectors such as government, oil and gas, banks, listed companies, licensed companies, and other entities.
Media Contact
Hisham Sorour, Baker Tilly Kuwait, 965 1887799 Ext: 335, [email protected]
SOURCE Baker Tilly Kuwait
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