FIXING A HOLE: THE NEW REGULATION ON RELATED PARTY TRANSACTIONS DISCLOSURE AND ORDINARY COURSE OF BUSINESS POLICY

Since its entry into force, it was evident that the regulation on related party transactions had a flaw that allowed its circumvention: the rules on ordinary course of business transactions and on reporting to the market of transactions that were not of a material amount. Time and empirical observation confirmed this finding. However, solving this gap was not easy, since the regulation of ordinary course of business transactions, particularly those that take place within corporate groups, must satisfy a dual purpose, which is difficult to balance: to avoid tunneling, but not to hinder the smooth functioning of the companies within these groups. This research paper demonstrates how the new regulation analyzed establishes a framework that allows companies to achieve both objectives, but warns that this, in part, depends on its proper application by the regulated corporations.