What is Consequences of violating related party transaction rules?
Nexa Consultancy | Startup & Finance Glossary
Entering into a related party transaction without proper board or shareholder approval can render the contract voidable. The defaulting director may have to indemnify the company for any loss incurred and can face penalties.
Startup Example: A founder, without board approval, awards a large contract to a company owned by their spouse. This transaction can be cancelled by the board, and the founder can be held liable for any losses.
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