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Related Party Transactions Crib Sheet Notes

LPC Law Notes > Public Companies and Equity Finance Notes

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Related Party Transactions 1) Is the company premium-listed?
a. LR 11.1.1R Chapter 11 applies to a company that has a premium listing a.i. LR 11.1.2G(1) & (2) Chapter 11 applies safeguards to transactions and arrangements between a listed company on the one hand and related parties on the other to prevent the related party taking advantage of its position 2) Is there a transaction?
a. LR 11.1.3R A transaction is a reference to the entering into the agreement for the transaction a.i. APPLY TO THE FACTS 3) Is there a related party?
a. A related party is a.i. LR 11.1.4R(1) A substantial shareholder?
a.i.1. Appendix 1.1 LR a substantial shareholder man a person with more than 10% voting shares in the listing company a.i.1.a. A company is a legal person a.ii. LR 11.1.4R(2) Director or Shadow Director?
a.ii.1. Equitable Life Director includes a non-executive director a.iii. LR 11.1.4R(4) A person exercising significant influence a.iv. LR 11.1.4R(5) An associate of a related party (Is there an associate of a person? Is that person a related party?) a.iv.1. Appendix 1.1 an associate of a director means a director's a.iv.1.a. Spouse, civil partner or child a.iv.1.b. Trustee of any trust of which the director is a beneficiary or their family are a.iv.1.c. Any company in whose shares the director and member of his family are able to exercise or control 30% or more of the votes at a GM or appoint/remove directors a.iv.2. Appendix 1.1 an associate in relation to a substantial shareholder means a.iv.2.a. Any other company which is its subsidiary or parent or fellow subsidiary or parent a.iv.2.b. Any company whose directors are accustomed to act in accordance with the substantial shareholder's directors a.iv.2.c. Any company in the capital of which the substantial shareholder and the first company taken together would be a substantial shareholder 4) Is there a related party transaction?
a. LR 11.1.5R(1) A transaction between a listed company and a related party b. LR 11.1.5R(2) An arrangement pursuant to which a listed company and a related party each invests in, or provides finance to, another undertaking or asset c. LR 11.1.5R(3) A transaction between a listed company and any person, the purpose and effect of which is to benefit a related party 5) Class Tests a. LR 10, Annex 1, Para 8 The latest published accounts should be used, but in the absence of these the preliminary statement of annual results can be used a.i. APPLY TO FACTS b. LR 10 Annex 1, Para 2R Gross Asset Test b.i. (Gross assets which are transaction subject/Gross assets of listed company) X 100 c. LR 10 Annex 1, Para 4R Profits Test

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