CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies and Procedures for Approval of Related Party Transactions
We have adopted a written policy with respect to the review, approval and ratification of related party transactions. Under the policy, our Audit Committee is responsible for reviewing and approving related party transactions. In the course of its review and approval of related party transactions, our Audit Committee considers the relevant facts and circumstances to decide whether to approve such transactions. In particular, our policy requires our Audit Committee to consider, among other factors it deems appropriate:
the related person’s relationship to us and interest in the transaction;
the material facts of the proposed transaction, including the proposed aggregate value of the transaction;
the impact on a director’s independence in the event the related person is a director or an immediate family member of the director or director nominee;
the benefits to us of the proposed transaction;transaction
if applicable, the availability of other sources of comparable products or services; and
an assessment of whether the proposed transaction is on terms that are comparable to the terms available to an unrelated third party or to employees generally.
The Audit Committee may only approve those transactions that are in, or are not inconsistent with, our best interests and those of our shareholders,stockholders, as the Audit Committee determines in good faith.
In addition, under our Code of Ethics our employees, directors and executive officers must disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.
Related Party Transactions
Other than compensation arrangements for our directors and named executive officers, which are described in the section entitled “Executive and Director Compensation” elsewhere in this proxy statement, below we describe transactions during the fiscal year ended June 30, 20212022 and June 30, 2023 to which we were a participant or will be a participant, in which:
the amounts involved exceeded or will exceed $120,000; andor
1% of the average of our total assets at June 30, 2022 and 2023,
and, in which any of our directors, executive officers, or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.
PWD Loan
Pinewood Lodge, LLP (“PWD”), one of our variable interest entities in which we own a 0.01% partnership interest, develops, constructs, owns, maintains and operates certain apartment complexes intended for rental to low-income individuals aged 62 and over. Pursuant to the PWD Amended and Restated Agreement of Limited Partnership, our wholly-owned subsidiary Continental Community Housing, the general partner of PWD (the “General Partner”), helped fund operating deficits and shortfalls of PWD in the form of a loan (the “PWD Loan”). As of June 30, 2021, $0.7 million was recorded in deposits and other, and the highest aggregate amount of principal outstanding under the PWD Loan was $0.7 million in fiscal year 2021. The PWD Loan does not accrue interest. The General Partner is paid an administration fee of $35,000 per year.
Director Nomination Agreement
In connection with our IPO,initial public offering, we entered into a Director Nomination Agreement with the Principal Shareholders that provides each the right to designate nominees for election to our Board. The Principal Shareholders may also assign their designation rights under the Director Nomination Agreement to an affiliate. See “Board of Directors and Corporate Governance—Director Nomination Agreement” for a description of the Director Nomination Agreement.