The board of directors of the subsidiary must prepare a report related to the company's relations with the parent company and dependent companies within the first quarter of the year. This report includes all legal transactions which the company conducted in the previous year with the parent company and any companies that the parent company participates in. This report will also include any compensation of losses of subsidiaries by the parent company.
The transactions as stated in the aforementioned must be in compliance with "true and fair accounting principles”.
In addition, the board of directors of the subsidiary must explain whether or not the subsidiary incurred any damages resulting from taking or refraining from taking the measure pertaining to the transactions with the group of companies including the parent company. If the subsidiary incurred damage, the board of directors must also explain whether or not the damage was compensated. This explanation must only be included in the annual report.
Each board member of the parent company may request from the chairman of the board of directors to have a report prepared that includes:
- The subsidiaries financial position and financial performance,
- The relations of the parent company with subsidiaries,
- The relations of subsidiaries with each other,
- The relations of parent company subsidiaries with their shareholders and their relatives,
- All transactions among the related companies and their results and impact on the financial statements.
The financial information as included in this report must be prepared in accordance with true and fair accounting principle. The board member may request that this report be presented to the board of directors and its conclusion section is included in the annual report and audit report.
