| 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
- Company profile — legal name, state of incorporation, public/private status, exchange listing (NYSE/Nasdaq)
- Governance documents — certificate of incorporation, bylaws, Audit Committee charter, Code of Ethics
- Existing RPTs — current or anticipated related party relationships or transactions
- Dollar threshold — internal approval threshold (common: $120K, $250K, or $500K)
Quick Start
- Collect prerequisites above
- Draft policy sections in order below
- Calibrate thresholds — SEC disclosure floor is $120K (Item 404(a) of Reg. S-K); set internal pre-approval trigger at or above that
- Cross-reference Audit Committee charter to avoid conflicting governance authority
- 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
