158 / 521
members disapprove said transactions, the dissenting counter statement
shall be disclosed to public on the Public Disclosure Platform (“KAP”).
In order to prepare the aforementioned report, it is compulsory to
include the following matters:
a) Information on the parties to the transaction, i.e. trade name,
activities, whether they are a public company or not, and a
summary of their financial data, including the total assets on an
annual basis, the business profits, net sales, etc;
b) General information on the relationship between the compa-
nies who are party to the transaction and the impact of said
relationship on company activities;
c) The date and subject of the agreement which forms the basis of
the transaction, the substantive content of the agreement pro-
vided that there is no trade secret and in case such information
has been disclosed in a document (i.e. prospectus) in the past,
information regarding such matter;
d) The evaluation criteria as to whether or not the transaction is in
conformity with the market conditions; and
e) An evaluation as to whether or not the transaction is in confor-
mity with market conditions.
Art. 10 of the Communique shall not apply for the distribution of
profits, the exercise of pre-emptive rights and payments related to the
financial rights of the directors, the portfolio management, investment
and intermediary services received by the related parties of brokerage
companies, real estate investment trusts and venture capital investment
trusts. Additionally, said article shall not apply to the transactions of
banks and financial institutions with their related parties arising from
their ordinary activities.
Conclusion
In general, public companies should fulfill some obligations under
the capital markets legislation before executing a related party transac-
tion, i.e. adopting a board of directors’ resolution, preparing a report
etc.. Additionally, it is important that a public company fulfill its oblig-
ation of public disclosure before a related party transaction.
142
NEWSLETTER 2014