Certain transactions in which directors are interested may only take place subject to the agreement of the shareholder(s) 5.1 In general, directors should not be encouraged to use loans or guarantees from companies. They should only receive remuneration or seat costs. If the company so decides, loans to directors should only be allowed if the company authorizes such loans by a specific decision. The information to be provided to shareholders in the explanatory memorandum should be laid down in the rules. It should be open to a company to formulate systems (e.g. B housing loan programmes) for executive directors. Once such schemes have been approved by shareholders by special decision, loans granted under such schemes may be granted to authorised directors without being re-authorised by the shareholders. 5.2 Transactions relating to short-term quasi-loans to directors or the financing of the director`s expenses (to be reimbursed subsequently by the director) up to a certain limit (by means of rules) may be authorised by special decision, subject to the agreement of the shareholders. [Quasi-lending is a transaction where by which one party – the creditor undertakes to pay or pay an amount for another (the borrower), an amount for another (the borrower) or agrees to repay expenses incurred by a third party for the borrower or, on the other hand, to repay, under an agreement, on terms that the borrower would repay to the lender, or in circumstances that warrant an obligation on the borrower to repay the creditor.] 5.3 The financing of the Director`s statutory expenses for the obligation to the undertaking should be excluded from these provisions. 5.4 Special arrangements may be made where loans or quasi-loans are authorised by companies lending funds to their employees, including directors, subject to the provisions of the RBI and other supervisory authorities. This financial catastrophe led to the development of the Sarbanes-Oxley Act of 2002, which established new and expanded requirements for the boards, management, and audit firms of U.S. fellows, including specific rules that limit conflicts of interest resulting from related party transactions. In the United States, financial market supervisors help ensure that transactions with related parties are not conflictual and do not have a negative impact on shareholder value or corporate profits.

For example, the Securities and Exchange Commission (SEC) requires all publicly traded companies to disclose all transactions with related companies – such as officers, employees and their family members – in their 10 Q quarterly reports and 10 K annual reports . . . .

Posted in Uncategorized