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Browsing Law by Subject "abusive related party transactions"

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    The Regulation of Related Party Transactions in the Ethiopian Financial Sector: With Special Focus on Banks
    (Addis Ababa University, 2013-02) Redae, Getachew; Teshome, Tilahun (Professor)
    The main purpose of the research paper is to examine whether or not the regulation of related party transaction in the financial sector in general has got due attention and whether the regulation of related party transactions in the Ethiopian financial sector was adequate or not in particular. In this regard, it can be said that though we may get many researches and literatures dealing with corporate governance issues, there are relatively a few researches and literatures which deal with the regulation of related party transactions. Even, the available materials provide with the related party transactions in the nonfinancial sector in general. However, the regulation of related party transactions in the financial sector is different from non-financial sector. Even if related party transaction has a great effect on a company, financial sector and the economy of a given country, the attention given to it was relatively little. Companies and countries began to regulate related party transactions after the occurrences of several financial company collapses thought to be mainly affected by abusive related party transactions. Besides, the discussion in the regulation of related party transactions in the Ethiopian financial sector comes to the conclusion that its regulation is not given proper attention and is not adequate in general. For example, the important legal regulation instruments in the regulation of related party transactions in the financial sector such as the requirements of disclosure and approval of related party transactions are not available in Ethiopia. Besides, the concepts of materiality and immateriality of related party transactions and their distinction is not provided in the existing Ethiopian laws. Even if an attempt is made to define related parties from the context of commercial banks, there is no definition for related party transactions. In addition, the available relevant law in Ethiopia is simply concerned with the limitation of loans of commercial banks to their related parties. Hence, other types of related party transactions are not regulated well in the existing Ethiopian laws. On the other hand, the remedies and sanctions in case of violations of regulations of and abusive related party transactions are not provided in Ethiopia. Particularly, the application of class action and/or derivative suits to the claims of abusive related party transactions in the Ethiopian financial sector is not provided clearly.Finally, it should be remembered that great efforts were exerted to indicate the concerns, gaps and problems in relation to the regulation of related party transactions in the financial sector in general and in the financial sector in Ethiopia in particular and finally come up with some possible solutions. Key words: related party, related party transactions, abusive related party transactions, arms length basis, disclosure and approval