Drafting comprehensive related party transaction policies requires extensive knowledge of SEC regulations, corporate governance best practices, and audit committee procedures. Corporate counsel spend hours researching disclosure thresholds, crafting approval workflows, and ensuring compliance with evolving securities laws—all while coordinating with multiple stakeholders.
Creating comprehensive related party transaction policies requires deep expertise in securities law, corporate governance, and SEC disclosure requirements. Manual drafting takes 8+ hours of attorney time to ensure proper definitions, approval procedures, and regulatory compliance while balancing shareholder protection with business flexibility.
CaseMark generates complete, board-ready related party transaction policies tailored to your company's structure and regulatory status. Our AI analyzes your corporate documents to produce policies with precise definitions, rigorous audit committee procedures, and full SEC compliance in minutes.
This workflow is applicable across multiple practice areas and use cases
Securities attorneys need related party transaction policies to ensure public companies comply with SEC Regulation S-K Item 404 disclosure requirements and maintain proper governance controls.
This workflow directly addresses SEC compliance and securities regulations, making it essential for securities law practitioners advising public companies on disclosure obligations and regulatory compliance.
M&A attorneys use related party transaction policies during due diligence to identify potential conflicts, undisclosed relationships, and governance risks that could affect deal valuation or structure.
Related party transactions are critical due diligence items in M&A deals, and buyers require target companies to have robust policies governing such transactions to assess governance quality and identify hidden liabilities.
VC and PE attorneys implement related party transaction policies for portfolio companies to protect minority investors and establish governance frameworks that prevent self-dealing by management or controlling shareholders.
Private equity and venture capital firms require portfolio companies to adopt these policies to ensure proper oversight of transactions between the company and its executives, directors, or affiliated entities, protecting investor interests.
Non-profit attorneys draft related party transaction policies to comply with IRS Form 990 disclosure requirements and state charity regulations governing conflicts of interest and self-dealing.
Non-profit organizations face strict regulatory requirements regarding related party transactions, and the IRS requires detailed disclosure of such transactions, making comprehensive policies essential for tax-exempt status compliance.
A related party transaction policy establishes procedures for identifying, reviewing, approving, and disclosing transactions between a company and its directors, officers, significant shareholders, or their family members. Public companies need these policies to comply with SEC disclosure requirements under Regulation S-K and stock exchange listing standards, while all companies benefit from the conflict of interest protections and governance safeguards these policies provide.
The SEC requires disclosure of related party transactions exceeding $120,000 under Item 404(a) of Regulation S-K, making this a common baseline threshold. However, larger companies may adopt higher internal approval thresholds such as $250,000 or $500,000 to reduce administrative burden while maintaining the lower SEC threshold for disclosure purposes. The appropriate threshold depends on company size, transaction volume, and governance maturity.
Best practice assigns exclusive approval authority to the audit committee of the board of directors, with any interested directors required to recuse themselves from deliberations and voting. The audit committee should evaluate whether transactions are on terms no less favorable than arm's-length deals with unaffiliated parties and are fair and reasonable to the company. Some policies allow standing pre-approval of low-risk transaction categories to streamline administration.
The policy should seamlessly integrate with your certificate of incorporation, bylaws, audit committee charter, and code of business conduct by using consistent terminology, including appropriate cross-references, and avoiding conflicting authority or procedures. CaseMark analyzes your uploaded governance documents to ensure the policy complements your existing framework without creating gaps or contradictions in your governance structure.