The impact on Maltese listed companies of the regulatory framework on related party transactions : an evaluation

Abstract

Purpose: Following the recent international accounting scandals, Related Party Transactions, are today more than ever at the centre of attention. This dissertation sets out to assess the importance of Related Party Transactions within Maltese Listed Companies. Moreover, it seeks to shed light on the importance of regulating Related Party Transactions within the local scenario and the impact amendments to the Maltese Listing Rules regulating Related Party Transactions have had on Maltese Listed Companies. Furthermore, this is the first study, which attempts to measure the perceived effectiveness of the Maltese Listing Rules relating to Related Party Transactions. Design: The objectives of this study were achieved through a series of semi-structured interviews with Maltese Listed Company officials and with officials from the Malta Financial Services Authority (MFSA). Findings: This dissertation establishes that due to the structure of most Listed Companies, Related Party Transactions are considered essential in the local scenario. The existence of ‘blockholder’ shareholders in most local Listed Companies highlights the importance of regulating Related Party Transactions. The study delves also into the level of awareness, different stakeholders have of the risks Related Party Transactions may pose. Moreover, the study establishes that the perceived effectiveness of the Maltese Listing Rules regulating Related Party Transactions is between 68.41% and 76.79%. The study concludes by setting out a number of recommendations, which in the authors’ opinion will make the Listing Rules regulating Related Party Transactions clearer.