Related-Party Transactions

Under UK listing rules, the Financial Conduct Authority has set out a number of safeguards (the most important of which is shareholder approval) that apply to transactions and arrangements between a listed company and a related party; and transactions and arrangements between a listed company and any other person that may benefit a related party. The safeguards are intended to prevent a related party from taking advantage of its position and also to prevent any perception that it may have done so. The FCA defines a related party as a substantial shareholder; a director or shadow director of a listed company in question; a person exercising significant influence over the listed company; or an associate of a related party. The FCA defines a related party transaction as “a transaction (other than a transaction in the ordinary course of business) between a listed company and a related party; or an arrangement (other than an arrangement in the ordinary course of business) pursuant to which a listed company and a related party each invests in, or provides finance to, another undertaking or asset; or any other similar transaction or arrangement between a listed company and any other person the purpose and effect of which is to benefit a related party