Related Party Transactions

Related party transactions (RPTs) are transactions between a company and its related parties — including directors, senior management, controlling shareholders, and their associates.

While RPTs can be legitimate business transactions, they carry inherent risks of abuse, particularly in companies with concentrated ownership. Effective governance of RPTs requires disclosure of the nature, terms, and business rationale of significant transactions; independent review and approval (typically by independent directors or a committee); shareholder approval for material transactions; and arm's-length pricing verification. Most listing rules and governance codes require specific disclosure and approval procedures for RPTs.

Further Reading

• G20/OECD Principles of Corporate Governance
• ESRS

Key Resources

• IAS 24 Related Party Disclosures

Related Topics

• Board Responsibilities
• Disclosure & Transparency
• Sustainability & Resilience