Can companies engage in related entity transactions?
Posted on Monday, December 14th, 2009 at 4:31 am
Related entity transactions are defined as transactions between a corporation or owners of a corporation and another corporation or owners that are affiliated with the former corporation. Affiliation is usually determined by the percentage of ownership between corporations and their owners.
While related-entity transactions typically come under scrutiny, they are allowed in most circumstances. However, when they occur, they must be approved by the Board of Directors, approved by auditors, and disclosed to the public.
While these rules apply especially to public companies, they can also have implications for private companies. For instance, private companies engaging in related-entity transactions will be scrutinized by lenders and investors.
If your business has questions about its related-entity transactions, contact the Des Moines related-entity transactions lawyers of LaMarca Law Group, P.C., at (877) 327-2600.