25.1 INTRODUCTION
The term related or interrelated person is widely used around the world including on the JSE and there is a whole chapter provided in the listing requirements devoted to transactions between related parties.
As a company secretarial practitioner this is something you need to know as the term related person appears in the companies Act 80 times. These terms have been included in the Companies Act to increase transparency and improve the standards of corporate governance. These terms are used in the context of safeguarding minority shareholders against the majority of shareholders or directors taking unfair advantage of these relationships.
Where two parties transact the transaction may be between 2 people who are related which may be to the detriment of minority shareholders. E.g. where a loan is made to a director. In terms of s 45 a special resolution is required. What is the position if the loan is made to another person who has a relationship with the director!
It may also be that related or interrelated parties act independently or at arm’s length and the act empowers the court, the takeover regulation panel or the Companies Tribunal from exempting such parties from the provisions of the act.