related-party-transaction-policy

name	related-party-transaction-policy
title	Related Party Transaction Policy
description	Drafts a board-adoptable Related Party Transaction Policy for U.S. corporations governing identification, Audit Committee review, approval, and disclosure of related party transactions. Enforces SEC Item 404(a)/Regulation S-K compliance and stock exchange listing standards. Use when creating or updating RPT policies for public or private companies, or when drafting corporate governance documents addressing conflicts of interest.
author	CaseMark
author_url	https://github.com/CaseMark/skills/tree/main/skills/legal/related-party-transaction-policy
license	Apache-2.0
version	0.1.0
execution_mode	open
jurisdiction	us
practice	corporate
language	en

Related Party Transaction Policy

Drafts a Related Party Transaction Policy with Audit Committee governance, SEC-compliant disclosure, and fiduciary duty safeguards.

Prerequisites

1. Company profile — legal name, state of incorporation, public/private status, exchange listing (NYSE/Nasdaq)
2. Governance documents — certificate of incorporation, bylaws, Audit Committee charter, Code of Ethics
3. Existing RPTs — current or anticipated related party relationships or transactions
4. Dollar threshold — internal approval threshold (common: $120K, $250K, or $500K)

Quick Start

1. Collect prerequisites above
2. Draft policy sections in order below
3. Calibrate thresholds — SEC disclosure floor is $120K (Item 404(a) of Reg. S-K); set internal pre-approval trigger at or above that
4. Cross-reference Audit Committee charter to avoid conflicting governance authority
5. Format as 4–7 page board-adoptable document with signature lines

Policy Sections

1. Header & Purpose

• Title: [Corporation Legal Name] Related Party Transaction Policy and Procedures
• Purpose: transparency, conflict prevention, SEC compliance, shareholder protection
• Include effective date, version number, adoption authority (full Board)

2. Definitions

Term	Definition
Related Party	Directors, executive officers, nominees, >5% beneficial owners of any voting class, and their immediate family members
Immediate Family Member	Spouse, parents, children, siblings, in-laws, household members (non-tenant/employee)
Related Party Transaction	Transaction where (a) aggregate amount exceeds threshold, (b) company/subsidiary is participant, (c) Related Party has direct/indirect material interest
Material Interest	Excludes: director/officer position at the company; <10% ownership of counterparty

Covered transaction examples: property/service sales, consulting/employment arrangements outside ordinary course, loans/guarantees, charitable contributions where Related Party is officer/director.

3. Identification Procedures

• Individual duty: Directors and executive officers must disclose potential RPTs to Audit Committee Chair and General Counsel before any binding commitment