• MKT 9.5 MKT 9.5 Related Party Transactions

    • Application

      • MKT 9.5.1

        This section applies, subject to Rule 9.5.4, to:

        (1) A Reporting Entity; and
        (2) a Related Party of such a Reporting Entity.

    • Definitions

      • MKT 9.5.2 MKT 9.5.2

        In this section, unless otherwise provided:

        (1) a Person is a Related Party of a Reporting Entity if that Person:
        (a) is, or was within the 12 months before the date of the Related Party Transaction:
        (i) a Director of the Reporting Entity or a member of its Group;
        (ii) a Related Party Associate of a Person referred to in (1)(a)(i); or
        (b) owns, or has owned within 12 months before the date of the Related Party Transaction, voting Securities carrying more than 10% of the voting rights attaching to all the voting Securities of either the Reporting Entity or a member of its Group; or
        (c) is a Person exercising or having the ability to exercise significant influence over the Reporting Entity or a Related Party Associate of such a Person.
        (2) A transaction is a Related Party Transaction if it is a transaction:
        (a) between a Reporting Entity and a Related Party;
        (b) entered into pursuant to an arrangement between the Reporting Entity and the Related Party under which the Reporting Entity and the Related Party each invests in another Undertaking or asset, or provides financial assistance to another Undertaking;
        (c) between the Reporting Entity and any other Person, the purpose or effect of which is to benefit a Related Party; or
        (d) of the kind referred to in (a) to (c) and is between a Subsidiary of a Reporting Entity and a Related Party of the Reporting Entity.

        • Guidance

          1. A Person is regarded as exercising significant influence over a Reporting Entity, for example, if that Person is a consultant or adviser or a shadow director of the Reporting Entity. For the purposes of this rule, "shadow director" means a person in accordance with whose directions or instructions the Directors of the Reporting Entity are accustomed to act.
          2. Any transactions between a Subsidiary of a Reporting Entity and a Related Party are included within the definition of a Related Party Transaction. This is because a Related Party may, through the Reporting Entity, be able to influence terms which are more favourable to the Related Party when transacting with the Subsidiary. Such transactions could be detrimental to the interests of the Reporting Entity.

    • Related Party Transaction procedures

      • MKT 9.5.3

        A Reporting Entity must ensure that:

        (1) if the value of a Related Party Transaction is equal to or greater than 5% of value of the net assets of the Reporting Entity as stated in its most recent financial reports, it does not enter into such a transaction unless the transaction has been put to Shareholder approval and has received prior approval by a majority of the Shareholders in voting of the Reporting Entity;
        (2) if the value of the Related Party Transaction is less than the 5% threshold referred to in (1):
        (a) it obtains a written confirmation from its Sponsor before entering into the transaction or, where a Sponsor has not been appointed its compliance adviser, that the terms of the transaction are fair and reasonable; and
        (b) as soon as possible after entering into the transaction, it discloses the Related Party Transaction to the market in accordance with Rule 7.7.1;
        (3) if the cumulative value of a series of Related Party Transactions with the same Related Party which have not received Shareholder approval reaches the 5% threshold referred to in (1) in any 12 month period, it does not enter into the last of the series of the transactions unless such proposed action has been put to Shareholder approval and received approval by a majority of the Shareholders in voting of the Reporting Entity;
        (4) if, after obtaining Shareholder approval pursuant to Rule 9.5.3(1) but before the completion of the Related Party Transaction, there is a material change to the terms of the transaction, the Reporting Entity must comply again separately with Rule 9.5.3(1) in relation to the Related Party Transaction; or
        (5) the Related Party does not vote on the Shareholder resolution referred to in Rule 9.5.3(1) and takes all reasonable steps to ensure that any Related Party Associates of the relevant Related Party also do not vote on the Shareholder resolution.

    • Exemptions

      • MKT 9.5.4 MKT 9.5.4

        The requirements in this section do not apply to a transaction referred to in Rule 9.5.2(2):

        (1) where the transaction is made in the ordinary course of business;
        (2) where it, or any series of transactions with the same Related Party in any 12 month period, does not exceed 0.25% of the value of the net assets of the Reporting Entity as stated in its most recent financial reports;
        (3) where it is made in accordance with the terms of an Employee Share scheme or other Employee incentive scheme approved by the Board of the Reporting Entity;
        (4) where it involves the issue of new Securities for cash or pursuant to the exercise of conversion or subscription rights attaching to Securities issued to existing Shareholders where the Securities are traded on a Recognised Body or a Regulated Exchange;
        (5) where its terms were agreed before any Person became a Related Party;
        (6) where it involves a grant of credit (including the lending of money or the guaranteeing of a loan) to:
        (a) the Related Party on normal commercial terms;
        (b) a Director of the Reporting Entity or a member of its Group for an amount and on terms no more favourable than those offered to employees of the Group generally; or
        (c) by the Related Party on normal commercial terms and on an unsecured basis;
        (7) where it involves granting an indemnity to or maintaining a Contract of Insurance for a Director of the Reporting Entity or a member of its Group;
        (8) where it involves underwriting by a Related Party of Securities issued by the Reporting Entity or a member of its Group if the consideration to be paid for the underwriting is no more than the usual commercial underwriting consideration and is the same as that to be paid to the other underwriters (if any), except that this exception will not apply if the Related Party is underwriting Securities it is entitled to take up as part of the issuance; or
        (9) where it involves a joint investment arrangement between the Reporting Entity (or a member of its Group) and a Related Party for each to invest in, or provide finance to, another undertaking or asset if:
        (a) the amount contributed by the Related Party is not more than 25% of the amount contributed by the Reporting Entity (or a member of its Group); and
        (b) a Sponsor or, if one has not been appointed, an independent third party has provided a prior written opinion that the terms and circumstances of the contribution of finance by the Reporting Entity (or a member of its Group) are no less favourable than those applying to the contribution of finance by the Related Party.

        • Guidance

          In assessing whether a transaction is in the ordinary course of business, the Reporting Entity shall have regard to the size and incidence of the transaction and also whether the terms and conditions of the transaction are unusual.