FCA Imposes Fine on Premium Listed Company for Failing to Identify its Related Party Transactions
The Financial Conduct Authority has fined Asia Resource Minerals plc some £4.6m for historic breaches of the Listing Rules on related party transactions (“RPTs”).
Although the Company had a policy and procedures in relation to the treatment of RPTs, the Company’s procedures, systems and controls in relation to RPTs were inadequate in that the Company failed to:
- take reasonable steps to manage the increased risk of the occurrence of RPTs given the Company’s structure and its subsidiary director relationships;
- establish adequate management oversight and control over the subsidiary in a timely manner;
- implement the RPT policy at both the Company and subsidiary level; and
- ensure appropriate training was given.
The level of the fine was partly determined by the FCA’s finding that the Company’s breaches revealed serious and systemic weaknesses in the procedures and internal controls relating to the Company’s business. It was also relevant that the Company did not identify the breaches through its own monitoring but was prompted to review its internal position after allegations of financial irregularities were brought to its attention by an external source. An aggravating factor in assessing the level of the fine was the fact that the FCA had published a Final Notice in relation to a related matter, which highlighted relevant concerns in relation to RPTs. Whilst the Company was aware of this Final Notice and took steps to improve its RPT procedures, the FCA considered that these were not carried out sufficiently quickly and effectively in response to the concerns set out in the Final Notice.
A copy of the final notice can be read on the FCA website. (PDF)
