UKLR 8.2 Requirements for related party transactions

1If a listed company enters into a related party transaction where any percentage ratio is 5% or more, the listed company must:

1. (1)

   obtain the approval of its board for the transaction or arrangement before it is entered into;

2. (2)

   ensure that any director who is, or an associate of whom is, the related party, or who is a director of the related party, does not take part in the board’s consideration of the transaction or arrangement and does not vote on the relevant board resolution;

3. (3)

   before entering into the transaction or arrangement, obtain written confirmation from a sponsor that the terms of the proposed transaction or arrangement with the related party are fair and reasonable as far as the security holders of the listed company are concerned; and

4. (4)

   notify a RIS as soon as possible after the terms of the transaction or arrangement are agreed.

1The notification must include:

1. (1)

   details of the related party transaction, including:

   1. (a)

      the name of the related party;

   2. (b)

      the value of the consideration for the transaction or arrangement; and

   3. (c)

      a description of the transaction or arrangement;

2. (2)

   the fact that the transaction or arrangement is a related party transaction which fell within UKLR 8.2.1R;

3. (3)

   details of the nature and extent of the related party’s interest in the transaction(s) or arrangement(s);

4. (4)

   a statement by the board that the transaction or arrangement is fair and reasonable as far as the security holders of the company are concerned and that the directors have been so advised by a sponsor; and

5. (5)

   the name of the sponsor that provided the written confirmation in UKLR 8.2.1R(3).

1The notification must also include any further information the company considers relevant, having regard to the purpose of this chapter set out in UKLR 8.1.2G.

1If, before the completion of a related party transaction referred to in UKLR 8.2.1R that has been notified in accordance with this section, there is a material change to the terms of the transaction, the listed company must comply again separately with UKLR 8.2.1R to UKLR 8.2.3R in relation to the transaction.

1. (1)

   1Subject to (3), if a listed company enters into transactions or arrangements with the same related party (and any of its associates) in any 12-month period, the transactions or arrangements must be aggregated.

2. (2)

   If any percentage ratio is 5% or more for the aggregated transactions or arrangements, the listed company:

   1. (a)

      must comply with UKLR 8.2.1R, in respect of the latest transaction or arrangement; and

   2. (b)

      the notification required by UKLR 8.2.1R(4) must include:

      1. (i)

         all of the information required by UKLR 8.2.2R for the latest transaction or arrangement;

      2. (ii)

         the information required in UKLR 8.2.2R(1) to (3) for the other aggregated transactions or arrangements; and

      3. (iii)

         the information required by UKLR 8.2.3R.

3. (3)

   Transactions or arrangements completed during the 12-month period in (1) are not required to be aggregated with the latest transaction or arrangement if they were previously classified as a related party transaction notifiable (individually or collectively) under UKLR 8.2.1R or UKLR 8.2.7R(2).

1. (1)

   A listed company must notify a RIS as soon as possible if, after the notification under UKLR 8.2.1R(4), it becomes aware that:

   1. (a)

      there has been a material change affecting any matter contained in that earlier notification (other than a material change to the terms of the transaction to which UKLR 8.2.5R applies); or

   2. (b)

      a material new matter has arisen which would have been required to be mentioned in that earlier notification if it had arisen at the time of the preparation of that notification.

2. (2)

   The supplementary notification must:

   1. (a)

      give details of the change or new matter; and

   2. (b)

      contain a statement that, except as disclosed:

      1. (i)

         there has been no material change affecting any matter contained in the earlier notification; and

      2. (ii)

         no other material new matter has arisen which would have been required to be mentioned in that earlier notification if it had arisen at the time of the preparation of that notification.

3. (3)

   In paragraphs (1) and (2), ‘material’ means material for the purpose of making an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the listed company and the rights attaching to any securities forming part of the consideration.

1In the case of a related party which is a sovereign controlling shareholder or an associate of a sovereign controlling shareholder, where:

1. (1)

   a listed company is a sovereign controlled commercial company and:

   1. (a)

      has a sovereign controlling shareholder which was a controlling shareholder on the first occasion on which the company made an application for the admission of equity shares to the equity shares (commercial companies) category;

   2. (b)

      has made a notification in accordance with UKLR 6.4.18R and UKLR 6.4.19R; or

   3. (c)

      made an announcement in accordance with UKLR 21.5.6.R(2) and UKLR 21.5.9R when it transferred the listing of its equity shares to the equity shares (commercial companies) category; and

2. (2)

   the sovereign controlling shareholder is either:

   1. (a)

      recognised by the government of the UK as a State; or

   2. (b)

      the UK,

   UKLR 8.2.1R(2) and (3) and UKLR 8.2.2R(4) and (5) do not apply.