The Financial Service Authority issued administrative Decision warning Musandan Power (SAOG) after the former board of directors which resigned in 2024  engaged unaccredited entities to perform certain  internal audit works and the former board failed to ensure that related party transaction were entered into on fair  and arm-length basis in violation of the applicable laws and regulations.

The decision states that the former board of directors had conducted detailed transactions with a related party (major shareholder in the company) in violation of Article 13.a of the Securities Law which states a “regulated entity must ensure that related party transactions are entered into on fair and arms-length basis and not to favor them through the terms of such transactions.”

The decision 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, which provides “The company shall place the financial records at the disposal of the auditor to enable them to perform their duties in accordance with the law. The shareholders may access such records after submitting a request to that effect to the executive management.” 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.