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2.4 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 following principles will apply:
i)
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;
ii)
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;
iii) should a cost plus basis of pricing be used, the appropriatemark-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;
iv) 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; and
v)
there is no specific threshold for approval of Recurrent Related Party Transactions within the
Group. However, all recurrent related party transactions are subject to the approval by the
Audit Committee from time to time.
The Group has established the following procedures to ensure that the transactions with Related
Parties 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;