Related-Party Transactions Policy

Organization: [ORG]
Adopted by the Board of Directors: [DATE]
Last reviewed: [REVIEW_DATE]
Policy owner: [AUDIT COMMITTEE / GOVERNANCE COMMITTEE]
Cross-references: Conflict of Interest Policy; Audit Committee Charter; [CODE OF ETHICS]

Template notice. Public companies, nonprofits, cooperatives, and private companies face different disclosure and approval regimes (SEC, GAAP/IFRS, Form 990, state nonprofit statutes, lender covenants). Counsel must tailor definitions, thresholds, and approval pathways. Replace bracketed placeholders.

1. Purpose

Related-party transactions (RPTs) can be legitimate and beneficial, but they create loyalty and appearance risks. This Policy establishes how [ORG]:

Identifies related parties and RPTs;
Reviews and approves RPTs before they are entered (or ratifies when discovery is after-the-fact, with heightened scrutiny);
Documents fairness and business purpose;
Discloses RPTs as required by law, GAAP, lenders, and stakeholders; and
Monitors ongoing RPTs for changes in terms or relationships.

This Policy complements — and does not replace — the Conflict of Interest Policy. When both apply, follow the stricter procedural requirement.

2. Definitions

Related Party. Includes, without limitation:

Directors and nominees; officers; [KEY EMPLOYEES / 5%+ SHAREHOLDERS as applicable];
Immediate family members of the above (spouse/partner, parents, children, siblings, in-laws, household members);
Entities controlled by, controlling, or under common control with [ORG];
Entities in which a Related Party has a material ownership or governance interest ([THRESHOLD, e.g., 5%+]);
[OTHER CATEGORIES REQUIRED BY GAAP / REGULATION].

Related-Party Transaction. Any transaction, arrangement, or relationship (or series of similar transactions) in which [ORG] is a participant and a Related Party has or will have a direct or indirect material interest, including purchases/sales of goods or services, leases, loans, guarantees, contributions, shared-services agreements, and compensation arrangements outside ordinary employment approved under the Compensation Committee process.

Materiality. An interest is material if it would be important to a reasonable director evaluating independence or fairness. Transactions above $[THRESHOLD] in a fiscal year are presumed material; smaller transactions may still be material based on qualitative factors (unusual terms, exclusivity, reputational sensitivity).

Ordinary-course exception. Arm’s-length transactions available to the public on the same terms (e.g., standard member dues, published product pricing) may be exempt from pre-approval if listed in Appendix B, but still require annual reporting if aggregate amounts are significant.

3. Identification and Disclosure

3.1 Related-party registry

The [BOARD SECRETARY / CFO / COMPLIANCE] maintains a registry of known Related Parties drawn from annual questionnaires, beneficial ownership records, and officer certifications. Directors and officers must update the registry within [10] business days of changes.

3.2 Pre-deal disclosure

Anyone proposing that [ORG] enter a transaction that may be an RPT shall notify the Policy owner and provide: parties; ownership/relationship; business purpose; terms; alternatives considered; and draft agreement.

3.3 After-the-fact discovery

If an RPT is discovered after commencement, management shall halt non-essential performance where practical, disclose immediately, and seek ratification or termination under Section 5.

4. Review and Approval Authority

Transaction type	Approver
RPT involving a director or the CEO	Disinterested members of the Board or [AUDIT / GOVERNANCE] Committee
RPT involving other officers / key employees	[AUDIT COMMITTEE], with Board notice
Compensation of executives	[COMPENSATION COMMITTEE] per its charter (not double-processed as RPT unless unusual side arrangements)
Immateral ordinary-course (Appendix B)	Management certification; annual Audit Committee overview

Interested Persons recuse from deliberation and voting per the Conflict of Interest Policy. Quorum and voting follow bylaws and applicable law.

5. Approval Standards

Disinterested approvers shall approve an RPT only if they determine, in good faith, that:

Business purpose. The transaction advances [ORG]’s mission or commercial interests;
Fairness. Terms are comparable to those available from unrelated parties, supported by bids, market data, appraisals, or expert opinions as warranted by size/complexity;
Necessity / alternatives. Reasonable alternatives were considered or are impractical;
Independence. The Related Party’s influence was managed through recusal and independent negotiation where feasible; and
Ongoing oversight. Monitoring, termination rights, and reporting are adequate.

For nonprofits, consider private inurement / private benefit and intermediate sanctions risk. For entities with controlling shareholders, consider minority fairness and any special committee needs.

Loan guarantees, preferential credit, or asset transfers to Related Parties require heightened scrutiny and counsel involvement.

6. Documentation

For each approved RPT, the record shall include:

Disclosure package provided to approvers;
Comparability or market support relied upon;
Minutes reflecting recusal, discussion summary, and vote;
Final agreement stored in the contract repository and linked from the board portal;
Registry entry with owner, amount/estimate, term, and next review date.

7. Ongoing Monitoring

Management shall report to the Audit Committee at least [SEMI-ANNUALLY]:

Active RPTs and amounts year-to-date vs. approval envelope;
Material amendments or renewals (amendments that change economics require fresh approval);
Any RPTs entered under ordinary-course exceptions exceeding aggregate thresholds;
Issues, disputes, or audit findings related to RPTs.

8. Disclosure and Reporting

[ORG] shall disclose RPTs as required by:

Financial statement footnotes (GAAP/IFRS);
[Form 990 Schedule L / securities filings / member reports — as applicable];
Lender or grant covenants;
Board independence determinations.

The CFO and Policy owner coordinate so Board-approved lists match external disclosures.

9. Prohibited or Presumptively Restricted Transactions

Unless the Board expressly approves with counsel advice and strong fairness support, [ORG] will not:

Extend personal loans to directors or executive officers where prohibited by law ([e.g., SOX 402 for issuers]);
Engage in RPTs that waive competitive bidding policies without documented rationale;
Enter RPTs that conflict with donor, grant, or regulated-entity restrictions.

10. Violations

Entering into an undeclared RPT, withholding material information from approvers, or participating in approval while interested may result in transaction voiding where permitted, restitution, discipline, and Board removal proceedings. Report concerns via the Whistleblower Policy.

11. Training and Annual Certification

Directors and officers certify annually that they have disclosed Related Parties and know of no unapproved RPTs. New directors receive this Policy during onboarding.

12. Review

Audit Committee reviews this Policy annually with counsel and recommends updates. Next review: [NEXT_REVIEW_DATE].

Appendix A — RPT approval checklist

Related Parties identified and interest described
Business purpose stated
Alternatives / bids / market data attached
Draft contract reviewed by [COUNSEL / PROCUREMENT]
Interested Persons recused
Disinterested approval recorded in minutes
Registry and disclosure list updated
Owner and review date assigned

Appendix B — Ordinary-course exemptions (examples; customize)

Standard [MEMBER / CUSTOMER] purchases on published terms
Expense reimbursements under travel policy
[OTHER NARROW EXEMPTIONS]