NSE Amends Rules Governing Transactions with Related Parties

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July 22nd, 2014 /NSE



The objective of these Rules is to guard against the risk that interested persons could influence the Issuer, its subsidiaries or associated companies, to enter into transactions with such interested persons that may adversely affect the interests of the Issuer or its securities holders.


In applying these Rules, regard must be given to:

(1) The objective of the Rules; and


(2) The economic and commercial substance of the interested person transaction, instead of legal forms and technicality.



For the purposes of these Rules, the following definitions apply:

(1) "Entity at risk" means:

(a) The Issuer; or

(b) A subsidiary of the Issuer that is not listed on the Exchange; or

(c) An associated company of the Issuer that is not listed on The Exchange provided that the listed group, or the listed group and its interested person(s), has control over the associated company.


(2) "Financial assistance" includes:


(a) The lending or borrowing of money, guaranteeing or providing security for a debt incurred or the indemnifying of a guarantor for guaranteeing or providing security; or


(b) The forgiving of a debt, the releasing of or neglect in enforcing a financial obligation of another, or assumption of the financial obligations of another.

(3) “Interested person” means


(a) In the case of a company:—

(i) A director, chief executive officer, or controlling shareholder of the Issuer; or

(ii) Any person connected to such director, chief executive officer, or controlling shareholder.


(b) In the case of a Real Estate Investment Trust (REIT), the meaning ascribed to it in the

Securities and Exchange Commission’s Rules and Regulations.


(c) In the case of an investment fund which is not a REIT, —

(i) A director, chief executive officer or controlling shareholder of the investment manager(s) (or any equivalent) of the investment fund;

(ii) The investment manager(s) (or any equivalent), the trustee or controlling unit holder of the investment fund; or

(iii) Any associate of any of the persons or entities in (i) or (ii) above.


(4) "Interested person transaction" means a transaction between an entity at risk and an interested person.


(5) "Transaction" includes:—


(a) The provision or receipt of financial assistance; or

(b) The acquisition, disposal or leasing of assets; or

(c) The provision or receipt of services; or

(d) The issuance or subscription of securities; or

(e) The granting of or being granted options; and

(f) The establishment of joint ventures or joint investments;


Whether or not in the ordinary course of business, and whether or not entered into directly or indirectly (for example, through one or more interposed entities).





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