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The Company has no outstanding amount due and owing arising from the Recurrent
Related Party Transactions that exceeded the credit term as at the end of the
financial year ended 30 June 2012.
2.1.4 Guidelines and Review Procedures for Recurrent Related Party Transactions
To ensure that such Recurrent Related Party Transactions are conducted at arm’s
length and on normal commercial terms consistent with the Group’s usual business
practices and policies and will not be prejudicial to the Company’s shareholders,
the management will ensure that the transactions with the Related Parties will
only be entered into after taking into account the pricing, level of service, quality of
product, market forces and other related factors on terms not more favourable to
the Related Parties than those generally available to the public and not detrimental
to the minority shareholders of the Company.
Transactions with Related Parties will only be entered into under similar commercial
terms for transactions with unrelated third parties, which depend on the demand
and supply of the products and subject to the availability of the products in the
domestic market. Should a cost plus basis of pricing be used, the appropriate mark-
up to cost shall be determined on an arm’s length price based on a percentage
earned by the Company on unrelated party transactions which are the same or
very similar to the related party transactions.
At least two (2) other contemporaneous transactions with unrelated third parties
for similar products / services and / or quantities will be used as comparison,
wherever possible, to determine whether the price and terms offered to / by
the Related Parties are fair and reasonable and comparable to those offered to
/ by other unrelated third parties for the same or substantially similar type of
products / services and /or quantities. For certain products / services of which
quotation or comparative pricing from unrelated third parties cannot be obtained
(for instance, if there are no unrelated third party vendors / customers of similar
products or services, or if the product / service is a proprietary item), the transaction
price will be determined by the Group based on those offered by / to other related
parties for the same or substantially similar type of transaction to ensure that the
price and terms of the Recurrent Related Party Transaction are fair and reasonable
to the Group. There is no specific threshold for approval of Recurrent Related Party
Transactions within the Group.
The Group has established the following procedures to ensure that the transactions
withRelatedParties are undertaken on arm’s length basis and on normal commercial
terms, and on transaction prices and terms not more favourable to the Related
Parties than those generally available to the public:
i) A list of Related Parties will be circulated to the companies within the Group to
notify that all transactions with Related Parties are required to be undertaken
on an arm’s length basis and independent of undue influence from Related
Parties and on normal commercial terms and on terms not more favourable to
the Related Parties than those generally available to the public;
ii) All transactions with Related Parties, regardless of the transaction value, will
be reviewed by the sub-committee which is appointed and authorised by the
Audit Committee of the Company;
iii) A register will be maintained by the Group to record all transactions with
Related Parties which are entered into pursuant to the Proposed Shareholders’
Mandate;