M&A
Related-Party Transaction
Reviewed by iGaming Times editorial teamLast reviewed 24 September 2026
What is Related-Party Transaction?
A deal between a company and someone connected to it, such as a director, executive, major shareholder or an entity one of them controls. Disclosure is required and approval normally sits with independent directors.
Key takeaways
- A related-party transaction is a deal between a company and a director, executive, major shareholder or an entity one of them controls.
- Such deals are not improper in themselves; the safeguards are disclosure and approval by genuinely independent directors.
- For licensed gambling operators, suitability rules can bring regulators into the business dealings of officers, directors and substantial owners.
Why it matters
Related-party transactions are not improper in themselves and are often commercially sensible, since the counterparty may be the person who understands the business best. The risk is that the person on one side of the negotiation influences who sits on the other, so process is what separates a legitimate contract from value transfer.
The standard safeguard is approval by an independent committee, and its strength depends on how independent the committee really is. Members appointed by a board on which the counterparty sits, at a company where voting control rests with a small number of insiders, provide a procedural protection rather than a structural one. Timing compounds it: an agreement signed while the beneficiary still holds an executive role and a board seat invites a harder reading than one negotiated at arm's length afterwards.
For licensed gambling operators there is an additional dimension, since suitability requirements in many jurisdictions reach the business dealings of officers, directors and substantial owners, and regulators may ask questions that company law alone would not prompt.
The bottom line
The question is never whether a related-party deal happened but who approved it and when. In a controlled company, an independent committee is only as independent as the board that picked it.
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Frequently asked questions
What is a related-party transaction?
It is a deal between a company and someone connected to it, such as a director, executive, major shareholder or an entity one of them controls. Such transactions must normally be disclosed, and approval usually sits with independent directors. They are often commercially sensible, but the counterparty's influence over the company is what makes the approval process important.
Who approves a related-party transaction?
The standard safeguard is approval by a committee of independent directors, and its strength depends on how independent that committee really is. Members appointed by a board on which the counterparty sits, at a company where voting control rests with a few insiders, offer procedural rather than structural protection. Timing also matters: a deal signed while the beneficiary still holds an executive role invites closer scrutiny.
Why do related-party transactions matter to gambling regulators?
Many gambling jurisdictions apply suitability requirements that reach the business dealings of officers, directors and substantial owners of a licensed operator. A related-party transaction can therefore prompt questions from regulators that company law alone would not, on top of the disclosure and approval requirements that apply to any listed company.