Persons who are involved in breaking the CATSI Act related party benefits rules may be liable to pay a civil penalty of up to $200, 000 and may also be ordered to pay compensation to the corporation.
Further, if a person acts dishonestly that person can be fined up to $220, 000 or sent to prison for up to five years, or both.
The following tips will help you to put a series of measures in place to assist with managing related party benefits and promoting compliance within your corporation:
- Ensure that directors and management are aware of and thinking about the related party benefits rules – consider holding an annual information session.
- Adopt a related party benefits transactions policy.
- Ensure that all possible related party benefits / conflicts of interest are disclosed and recorded at the start of each board meeting.
- Consider seeking standing member approval for certain types of common related party benefits at each annual general meeting.
- Be prepared early – the process of seeking member approval can take a number of months. As soon as you are aware of a possible related party transaction think – does an exception apply? do I need member approval? when is the next general meeting scheduled?
- Play it safe – if you’re unsure, seek advice.