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Related Parties Agreement

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RELATED PARTIES AGREEMENT

Parties

This Related Parties Agreement (the "Agreement") is entered into as of (Effective Date), by and between:

Party A Entity Type (select applicable):
Party B Entity Type (select applicable):

Recitals

WHEREAS, Party A is engaged in the business of providing certain services and/or goods as described herein and has relationships with certain affiliated or otherwise connected entities; and

WHEREAS, Party B is a related party to Party A by virtue of common ownership, control, familial relationship, or contractual arrangement and may from time to time enter into transactions, provide services, or receive compensation that relate to Party A's operations; and

WHEREAS, the parties desire to set forth the terms and conditions governing transactions, services, payments, confidentiality and other matters between Party A and Party B.

Definitions

For purposes of this Agreement, "Related Party" means any individual or entity that directly or indirectly controls, is controlled by, or is under common control with a party, or any party's officer, director, shareholder, partner, member, or immediate family member who participates materially in the transaction.

Scope of Work

Payment Terms

Party B shall be compensated by Party A in accordance with the following terms:

Any late payment shall accrue interest or fees as set forth above and the prevailing party shall be entitled to recover costs of collection, including reasonable attorneys' fees.

Term and Termination

This Agreement shall commence on and shall continue in effect until unless earlier terminated in accordance with this Agreement.

Either party may terminate this Agreement for cause if the other party materially breaches any term and fails to cure within the notice period specified above. Termination for convenience must be effected in writing with the required notice period.

Confidentiality

Each party acknowledges that during the term of this Agreement it may have access to confidential, proprietary or trade secret information of the other party ("Confidential Information"). Confidential Information shall not include information that is (i) publicly available through no fault of the receiving party, (ii) rightfully received from a third party without restriction, or (iii) independently developed by the receiving party without use of the disclosing party's Confidential Information.

The receiving party shall: (a) use Confidential Information solely for the performance of its obligations hereunder; (b) protect the Confidential Information with at least the same degree of care as it protects its own confidential information; and (c) not disclose Confidential Information except as permitted by this Agreement or required by applicable law (provided that the receiving party provides prompt notice to permit the disclosing party to seek protective measures).

Representations; Indemnification

Each party represents that it has the corporate or individual authority to enter into this Agreement and to perform its obligations. Each party agrees to indemnify, defend and hold harmless the other party from any third party claims arising out of the indemnifying party's breach of this Agreement, gross negligence, or willful misconduct, subject to any limitations of liability set forth herein.

Governing Law; Dispute Resolution

This Agreement shall be governed by and construed in accordance with the laws of the state of without regard to conflicts of laws principles. The parties shall attempt in good faith to resolve disputes by negotiation, and if unresolved, disputes shall be submitted to binding arbitration in the selected jurisdiction unless otherwise mutually agreed.

Entire Agreement; Amendment

This Agreement, including any exhibits or schedules attached hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings and representations. Any amendment or modification of this Agreement must be in writing and executed by authorized representatives of both parties.

Miscellaneous

If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect. Neither party may assign its rights or delegate its obligations under this Agreement without the prior written consent of the other party, except that either party may assign this Agreement in connection with a merger or sale of substantially all of its assets.

Party A - Printed Name:

By:

Date:

Party B - Printed Name:

By:

Date:

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What a Related Parties Agreement Covers

A Related Parties Agreement documents transactions, obligations, or approvals between an organization and parties that have a pre-existing relationship to the entity (for example, subsidiaries, affiliates, directors, officers, major shareholders, or family members). It records terms, pricing, conflict disclosures, and approval steps to demonstrate that the transaction was reviewed and approved under applicable governance rules and fiduciary standards.

Why this Agreement Matters for Compliance and Transparency

Use a Related Parties Agreement to create an auditable record that discloses affiliations, avoids conflicts of interest, and documents corporate or board approvals required by law or internal policy.

Why this Agreement Matters for Compliance and Transparency

Who typically prepares and signs this agreement

Corporate legal teams, controllers, compliance officers, and deal counterparts commonly prepare or request these agreements before completing related-party transactions.

  • Boards of directors and audit committees when approving material intercompany deals or director-related transactions.
  • Corporate counsel or compliance officers preparing standardized disclosure and approval language for internal use.
  • External counterparties and lenders who require a signed confirmation of arms-length terms and governance approvals.

Use the document to provide clear evidence of disclosure and approval to auditors, lenders, and regulators.

Typical signers and their roles

Board Chair

The Board Chair or authorized director executes to confirm board-level review and approval; their signature demonstrates corporate governance oversight and is often accompanied by meeting minutes or a board resolution.

CFO / Controller

A finance officer signs to confirm accounting treatment, valuation methodology, and that the transaction complies with internal financial controls and disclosure obligations to external stakeholders or auditors.

Core elements to include in a professional Related Parties Agreement

A complete agreement balances factual transaction details with governance, disclosure, and remedies; each component supports auditability and legal review.

Parties

Full legal names, entity types, and affiliation descriptions for each party including ownership percentages or control relationships where relevant to the transaction.

Transaction Terms

Clear description of goods, services, pricing, payment terms, allocation of costs, and any discounts or special conditions compared to market terms.

Conflict Disclosure

Statement identifying the related-party relationship, any personal interests, and a declaration that the disclosure was provided to the board or committee reviewing the transaction.

Approvals and Authority

Reference to board resolutions, delegated authority limits, committee approvals, or written consents that authorize the transaction and identify who may sign on behalf of each party.

Representations and Warranties

Standard statements about capacity, authority, accuracy of disclosed information, and that the transaction does not breach existing obligations or corporate charters.

Remedies and Records

Remedies for breaches, recordkeeping requirements, audit access, confidentiality terms, and choice of governing law and dispute resolution mechanisms.

Required data fields at a glance

Party Name: Full registered name
Entity Type: Corporation, LLC, individual
Relationship: Affiliate, shareholder, officer
Transaction Date: MM/DD/YYYY
Consideration: Amount or value
Approving Authority: Board, committee, or officer

Step-by-step: completing a Related Parties Agreement

Follow these sequential steps to capture transaction detail, approval, and signature in a single, auditable document.

  • 01
    Prepare details: Assemble party info, relationship, and pricing
  • 02
    Attach approvals: Link board resolution or committee minutes
  • 03
    Populate form: Enter fields with exact names and MM/DD/YYYY dates
  • 04
    Sign and retain: Obtain signatures and store the executed agreement

Configuring an online workflow for this agreement

Map fields, approvals, and routing rules in your eSignature platform to reflect required signers and review steps.

Field Configuration
Signer Order Sequential or parallel routing
Authentication Email link, SMS code, or KBA
Supporting Files Attach board minutes or valuation reports
Retention Rule Automatic archive after execution

Where to send or file the executed agreement

Route the signed agreement to internal and external stakeholders to satisfy audit, tax, and regulatory needs.

  • Corporate Records: General counsel or corporate secretary
  • Finance Department: Controller for accounting entry
  • Internal Audit: For periodic review and sampling
  • External Parties: Counterparty and lender copies

Digital signing and file-sharing considerations

Use a compliant eSignature workflow that captures identity, audit trail, and tamper-evident storage.

  • Authentication: Email, SMS, KBA
  • File Formats: PDF, DOCX
  • Integrations: CRM, document repository

Typical timelines and important dates to track

Track approval windows, execution deadlines, and any filing or disclosure dates to avoid late reporting or missed governance steps.

Execution Deadline:

Set by contract or board resolution, often within 30–90 days

Board Ratification Date:

Date when the board formally approves the transaction

Tax Reporting Window:

Match fiscal year reporting and relevant IRS forms

Audit Submission:

Provide copies during the next internal or external audit cycle

Record Retention Start:

Effective date determines retention schedules

Key milestones from negotiation to archive

Monitor these milestone stages so the agreement proceeds through governance, execution, and record retention without gaps.

01

Negotiation Complete

Finalize terms and prepare draft for review

02

Internal Approval

Obtain board or delegated authority sign-offs

03

Execution

All parties sign the finalized agreement

04

Archive

Store executed copy in records management

Common mistakes to avoid when preparing this agreement

  • Failing to define the relationship precisely, which leads to incomplete disclosure and audit questions.
  • Omitting formal approval references, causing uncertainty about whether corporate governance requirements were satisfied.
  • Using vague valuation language such as 'market rate' without supporting valuation data or comparables.
  • Storing only a signed PDF without retention metadata or an audit trail linking signatures to approvals.

Risks and potential penalties from improper documentation

Tax Exposure: Incorrect reporting can trigger IRC §6721 penalties
Breach Claims: Shareholder litigation risk for unfair transactions
Regulatory Scrutiny: Agency inquiries for disclosure failures
Audit Adjustments: Restatement or revaluation risk
Contract Invalidity: Claims that approval procedures were not followed
Reputational Harm: Loss of stakeholder trust

How a Related Parties Agreement compares with similar documents

Compare purpose, formality, filing expectations, signers, and notarization to understand which document fits your need.

Criteria Related Parties Agreement Conflict of Interest Policy
Purpose document transaction set ongoing rules
Formality contractual policy document
Typical Signers cfo/board employees/officers
Notarization rare not typical

eSignature vendor pricing and feature comparison relevant to this agreement

Select an eSignature vendor based on price, compliance needs, and feature set such as bulk send, audit trail, and HIPAA support.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day trial No No Yes, limited Yes, limited
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently asked questions about Related Parties Agreements

Answers to common practical and legal questions about validity, signatures, approvals, and storage for Related Parties Agreements.


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