Muscat – The FSA noted that the company’s board engaged unaccredited entities to perform certain internal audit works and failed to ensure that related party transactions were entered into on fair and arm-length basis, violating the applicable laws and regulations.

The decision states that the former board of directors had conducted detailed transactions with a related party – a major shareholder in the company – in violation of Article 13.a of the Securities Law. This article mandates that regulated entities must ensure that related party transactions are conducted at arm’s length and without favouring any party through the terms of such transactions.

The decision also pointed out that the former board had enabled a major shareholder of the company to perform internal audit works, which is breach of Article 212 of the Commercial Companies Law. This article stipulates that companies must ensure their financial records are accessible to accredited auditors for proper auditing and that shareholders may access such records only upon submitting a formal request.

However, the former board allowed the major shareholder to audit the financial records in violation of the law.

Hence, the FSA urges all regulated companies to strictly abide by the applicable laws and regulations and any breach of such laws would result in financial penalties or any other administrative penalties.