Companies Act 2014 section 1110O

Transparency and approval of related party transactions

Section 1110O sets out the disclosure, announcement and shareholder approval requirements that apply when a traded public limited company enters into a material transaction with a related party.

• A traded PLC must publicly announce any material related party transaction no later than when the transaction is concluded, disclosing the nature of the relationship, the related party's name, the date and value of the transaction, and any other information needed to assess fairness.
• Prior shareholder approval at a general meeting is required before a material related party transaction can be completed, and any shareholder who is the related party must be excluded from that vote.
• Exemptions apply for transactions in the ordinary course of business on normal market terms, transactions with wholly-owned subsidiaries where no related party has an interest, director remuneration transactions awarded under section 1110M, and transactions offered to all shareholders on the same terms.
• A transaction is "material" if any percentage ratio under the four class tests in Schedule 21 reaches 5% or more, and all transactions with the same related party within any 12-month period or the same financial year must be aggregated when assessing materiality.

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