Organisations are required to:
1. be aware of who their related parties are
2. actively manage any transactions with them
3. disclose any related party transactions in the annual statutory accounts
To fulfil the first requirement, charities commonly maintain a register of interests. All trustees and senior staff (those with authority to let contracts or commit the organisation to expenditure) should declare their interests annually. The interests should include for themselves and close family members (such as spouse):
- trusteeships of other charities
- directorships of other organisations
- businesses in which they have a holding of more than 25%
It is not usually relevant to ask charity trustees for details of their shareholdings. The register should be updated annually and nil returns obtained. Organisations need to be aware of situations where there is a potential conflict of interest. A register of interests assists the process of identifying related parties. Asking for this information in advance adds transparency and enables the organisation to enter into any such transactions knowingly.