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Related Party Transaction Policy

Draft Related Party Transaction Policies in Minutes

15 minutes with CaseMark

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Related Party Transaction Policy

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Workflow

Related Party Transaction Policy

Overview

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.

How it works

  1. 1. Upload your documents

  2. 2. AI analyzes and extracts key information

  3. 3. Review and customize the generated content

  4. 4. Export in your preferred format (DOCX, PDF)

What you get

  • Introduction and Purpose

  • Definitions (Related Party and Related Party Transaction)

  • Review and Approval Procedures

  • Audit Committee Oversight Process

  • Standing Pre-Approval Categories

  • SEC Disclosure Requirements

  • Policy Administration and Review

What it handles

  • Introduction and Purpose

  • Definitions (Related Party and Related Party Transaction)

  • Review and Approval Procedures

  • Audit Committee Oversight Process

  • Standing Pre-Approval Categories

  • SEC Disclosure Requirements

  • Policy Administration and Review

Required documents

  • Certificate of Incorporation

    Company's certificate or articles of incorporation showing legal name and state of incorporation

    PDF, DOCX

  • Corporate Bylaws

    Current corporate bylaws outlining governance structure and procedures

    PDF, DOCX

Supporting documents

  • Audit Committee Charter

    Existing audit committee charter to ensure policy alignment with committee authority

    PDF, DOCX

  • Code of Business Conduct and Ethics

    Current code of conduct to maintain consistent terminology and cross-references

    PDF, DOCX

  • Corporate Governance Guidelines

    Existing governance guidelines to avoid duplicative or contradictory provisions

    PDF, DOCX

  • Board Committee Structure Documents

    Documentation of current board committee composition and responsibilities

    PDF, DOCX

Why teams use it

Generate SEC-compliant policies with proper disclosure thresholds and reporting requirements

Customize audit committee review procedures and approval workflows to your governance structure

Include comprehensive definitions of related parties, transactions, and material interests

Establish clear identification, review, and pre-approval processes for common transactions

Ensure consistency with corporate governance best practices and regulatory expectations

Questions

What is a related party transaction policy and why do companies need one?

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.

What threshold amount should trigger related party transaction review?

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.

Who should approve related party transactions under corporate governance best practices?

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.

How does this policy integrate with existing corporate governance documents?

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.

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