Related Party Policy
POLICY ON RELATED PARTY TRANSACTIONS
The Board of Directors (the 'Board') of Myanma Awba Group (the 'Company') has adopted this Policy upon the recommendation of the Audit Committee and the said Policy includes the materiality threshold and the manner of dealing with Related Party Transactions ('Policy'). Amendments, from time to time, to the Policy, if any, shall be considered by the Board based on the recommendations of the Audit Committee. In addition to this policy, the company will comply with any other provisions regarding related party transactions that exist in any valid shareholder agreements. This Policy applies to transactions between the Company and one or more of its Related Parties. It provides a framework for governance and reporting of Related Party Transactions including material transactions. The policy applies to all subsidiaries and affiliates in the Group.
This Policy is intended to ensure due and timely identification, approval, disclosure and reporting of transactions between the Company and any of its Related Parties in compliance with the applicable laws and regulations as may be amended from time to time. The provisions of this Policy are designed to govern the approval process and disclosure requirements to ensure transparency in the conduct of Related Party Transactions in the best interest of the Company and its shareholders and to comply with the statutory provisions in this regard.
Audit Committee or Committee means the Committee of the Board constituted from time to time with terms of reference as laid down by Board. Board means the Board of Directors of the Company. Key Managerial Personnel means Key Managerial Personnel including directors, business unit heads, or other employees or officers in positions key to the continuing business operations of the Company. Material Related Party Transaction means a Related Party Transaction which individually or taken together with previous transactions during the financial year, exceeds ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company or such limits as may be prescribed from time to time. Related Party means any Person: (a) that holds a material interest in the Company; (b) in which the Company or any of its Subsidiaries holds a material interest; (c) that is otherwise an Affiliate of the Company; (d) who serves (or has within the past 12 (twelve) months served) as a director, Key Managerial Personnel of the Company; or (e) who is a member of the family (including spouse, child, parents, siblings, in-laws, brother in-law, sister in-law) of any individual included in any of the foregoing. For the purpose of this definition, "material interest" shall mean a direct or indirect ownership of shares representing at least five per cent (5%) of the outstanding voting power or equity of the Company or any of its Subsidiaries. For the avoidance of doubt, it is hereby clarified that the Affiliated Companies shall be deemed to be a "Related Party"
'Related Party Transaction' means any transaction between the Company and any Related Party for transfer of resources, services or obligations, regardless of whether a price is charged and includes
a. Sale, purchase or supply of any goods or materials;
b. Selling or otherwise disposing of, or buying property of any kind;
c. Leasing of property of any kind;
d. Availing or rendering of any services;
e. Appointment of any agent for the purchase or sale of goods, materials, services or property;
f. Such related party's appointment to any office or place of profit in the Company, its subsidiary Company or associate Company;
g. Underwriting the subscription of any securities or derivatives thereof, of the Company;
h. Financing (including loans and equity contributions in cash or kind);
i. Providing or obtaining guarantees and collaterals; and
j. Deputation of employees. (The above is an indicative list and not an exhaustive one).
'Relative' means a relative and includes anyone who is related in any of the following manner;
a. Husband or wife;
b. Father (including step-father);
c. Mother (including step-mother);
d. Son (including step-son);
e. Son's wife;
g. Daughter's husband;
h. Brother (including step-brother); or
i. Sister (including step-sister). 'Transaction' with a related party shall be construed to include a single transaction or a group of transactions. The term Director, shall have the same meaning as assigned under the Myanmar Companies Act
The Audit Committee shall review and provide a recommendation to the Board with whom rests the ultimate authority for approval of Related Party Transactions based on this Policy. All proposed Related Party Transactions must be reported to the Audit Committee for prior approval by the Committee in accordance with this Policy. In the case of frequent / regular / repetitive transactions which are in the normal course of business of the Company, the Committee may grant standing pre-approval / omnibus approval, details whereof are given in a separate section of this Policy. In exceptional cases, where a prior approval is not taken due to an inadvertent omission or due to unforeseen circumstances, the Committee may ratify the transactions in accordance with this Policy.
4.1 REVIEW AND UPDATE OF THE POLICY
Revisions of this Policy are the principal way of implementing and communicating changes that may arise in response to the changing needs and requirements of the Company. This Policy should be reviewed at least annually for updates by the GCFO. Any employee may recommend changes to the Policy by using the appropriate direct reporting line authority and process. All amendments, additions or deletions to the Policy should be properly documented and authorized/ approved prior to implementation.
4.2 IDENTIFICATION OF RELATED PARTY TRANSACTIONS
Every Director and Key Managerial Personnel will be responsible for providing a declaration in the format as per Annexure 1 containing the following information to the Board/ Company Secretary on an annual basis:
1. Names of his / her Relatives;
2. Partnership firms in which he/ she or his / her Relative is a partner;
3. Private Companies in which he/ she is a member or Director;
4. Public Companies in which he/ she is a Director and holds along with his/her Relatives more than 2% of paid up share capital;
5. Any Body Corporate whose Board of Directors, Managing Director or Manager is accustomed to act in accordance with his/ her advice, directions or instructions; and
6. Persons on whose advice, directions or instructions, he/ she is accustomed to act (other than advice, directions or instructions obtained from a person in professional capacity).
Every Director and the Key Managerial Personnel will also be responsible to update the Board/ Company Secretary of any changes in the above relationships, directorships, holdings, interests and/ or controls immediately on him/ her becoming aware of such changes. The Board/ Company Secretary shall be responsible to maintain an updated database of information pertaining to Related Parties reflecting details of:
1. All Directors and Key Managerial Personnel;
2. All individuals, partnership firms, companies and other persons as declared and updated by Directors and Key Managerial Personnel;
3. Company's holding company, subsidiary companies and associate companies;
4. Subsidiaries of holding company;
5. Director or Key Managerial Personnel of the holding company or their Relatives;
6. All Awba Group entities; and
7. Any other entity which is a Related Party as defined under Myanmar Companies Act or the relevant Accounting Standard.
The database shall be updated whenever necessary and shall be reviewed at least once a year jointly by the Company Secretary and Group Chief Financial Officer. The functional/ business heads/ Group Chief Financial Officer /Company Secretary/ shall have access to the updated database. Every Director, Key Managerial Personnel, Functional/ Business heads/ Group Chief Financial Officer will be responsible for providing prior Notice to the Board/ Company Secretary of any potential Related Party Transaction. They will also be responsible for providing additional information about the transaction that the Board/ Committee may request, for being placed before the Committee and the Board. The suggested details and list of records and supporting documents which are required to be provided along with the Notice of the proposed transaction are provided in Annexure 2 to this Policy. The Company Secretary in consultation with the Group Chief Financial Officer may refer any potential related party transaction to any external legal/ transfer pricing expert and the outcome or opinion of such exercise shall be brought to the notice of the Audit Committee. Based on this Notice, the Company Secretary will take it up for necessary approvals under this Policy.
4.3 REVIEW AND APPROVAL OF RELATED PARTY TRANSACTION
All Related Party Transactions shall be subject to the prior approval of the Audit Committee whether at a meeting or by resolution by circulation or through electronic mode. A member of the Committee who (if) has a potential interest in any Related Party Transaction will not remain present at the meeting or abstain from discussion and voting on such Related Party Transaction and shall not be counted in determining the presence of a quorum when such Transaction is considered.
4.3.1 CONSIDERATION BY THE COMMITTEE IN APPROVING THE PROPOSED TRANSACTIONS
While considering any transaction, the Committee shall take into account all relevant facts and circumstances including the terms of the transaction, the business purpose of the transaction, the benefits to the Company and to the Related Party, and any other relevant matters. Prior to the approval, the Committee shall, inter-alia, consider the following factors to the extent relevant to the transaction:
a. Whether the terms of the Related Party Transaction are in the ordinary course of the Company's business and are on an arm's length basis;
b. The business reasons for the Company to enter into the Related Party Transaction and the nature of alternative transactions, if any;
c. Whether the Related Party Transaction includes any potential reputational risks that may arise as a result of or in connection with the proposed Transaction; and
d. Whether the Related Party Transaction would affect the independence or present a conflict of interest for any Director or Key Managerial Personnel of the Company, taking into account the size of the transaction, the overall financial position of the Director, Key Managerial Personnel or other Related Party, the direct or indirect nature of the Director's interest, Key Managerial Personnel's or other Related Party's interest in the transaction and the ongoing nature of any proposed relationship and any other factors the Committee deems relevant. While considering the arm's length nature of the transaction, the Committee shall take into account the facts and circumstances as were applicable at the time of entering into the transaction with the Related Party. The Committee shall take into consideration that subsequent events (i.e., events after the initial transactions have commenced) like evolving business strategies / short term commercial decisions to improve / sustain market share, changing market dynamics, local competitive scenario, economic / regulatory conditions affecting the global / domestic industry, may impact profitability but may not have a bearing on the otherwise arm's length nature of the transaction. For clarity on Arm's length principle: The following, indicative list, should be considered while determining The Arm's length principle issues while reviewing an RPT:
a) Does the related party transaction make commercial sense for the Company?
b) Has the transaction been entered on terms and conditions no more favorable than those for third parties in similar circumstances?
c) Was there a transparent, properly managed bidding or negotiation process?
d) Does the methodology of determining relevant valuations or prices make sense? e) Is the size of the related party's interest in the transaction reasonable and justifiable?
f) Is the timing of the transaction beneficial to the Company?
g) Are the provisions or limits imposed by the Company on the transaction sufficient? h) Has there been an appropriate assessment of the risks of the transaction to the Company?
4.3.2 APPROVAL BY CIRCULAR RESOLUTION OF THE COMMITTEE
In the event the Company Management determines that it is impractical or undesirable to wait until a meeting of the Committee to enter into a Related Party Transaction, such transaction may be recommended by the Committee by way of circular resolution in accordance with this Policy and statutory provisions for the time being in force. Any such approval must be ratified by the Board at its next scheduled meeting.
4.3.3 APPROVAL BY THE BOARD
The Committee shall recommend all Related Party Transactions to the Board for approval. If the Board elects to review and approve any such matter or it is mandatory under any law for Board to approve the Related Party Transaction, then the Board shall consider and approve the Related Party Transaction at a meeting and the considerations set forth above shall apply to the Board's review and approval of the matter, with such modification as may be necessary or appropriate under the circumstances, even without prior recommendation from the Committee.
4.3.4 STANDING PRE-APPROVAL / OMNIBUS APPROVAL BY THE COMMITTEE
In the case of frequent/ regular/ repetitive transactions which are in the normal course of business of the Company, the Committee may grant standing pre-approval/ omnibus approval. While granting the approval the Audit Committee shall satisfy itself of the need for the omnibus approval and that same is in the interest of the Company. The omnibus approval shall specify the following:
a. Name of the related party
b. Nature of the transaction
c. Period of the transaction
d. Maximum amount of the transactions that can be entered into
e. Indicative base price/ current contracted price and formula for variation in price, if any
f. Such other conditions as the Audit Committee may deem fit.
Such transactions will be deemed to be pre-approved and may not require any further approval of the Audit Committee for each specific transaction unless the price, value or material terms of the contract or arrangement, as mentioned from (a) to (f) above, have been varied/ amended.
Any proposed variations/ amendments to these factors shall require a prior approval of the Committee.
4.3.5 APPROVAL OF MATERIAL RELATED PARTY TRANSACTIONS
All Material Related Party Transactions shall require approval of the shareholders through special resolution and the Related Parties shall abstain from voting on such resolution.
4.3.6 TRANSACTIONS NOT IN ORDINARY COURSE OF BUSINESS OR NOT AT ARM'S LENGTH
All Related Party Transactions which are not in the Ordinary Course of Business or not at Arm's Length, or otherwise contravene the RPT Policy shall also require the prior approval of the shareholders through special resolution and the Related Parties shall abstain from voting on such resolution.
4.3.7 RELATED PARTY TRANSACTIONS NOT PREVIOUSLY APPROVED
In the event the Company becomes aware of a Related Party Transaction that has not been approved or ratified under this Policy, the transaction shall be placed as promptly as practicable before the Committee or Board or the Shareholders as may be required in accordance with this Policy for review and ratification. The Committee or the Board or the Shareholders shall consider all relevant facts and circumstances respecting such transaction and shall evaluate all options available to the Company, including but not limited to ratification, revision, or termination of such transaction, and the Company shall take such action as the Committee deems appropriate under the circumstances.
4.3.8 REVIEW OF RELATED PARTY TRANSACTIONS BY INTERNAL AND EXTERNAL AUDITORS
a) Internal Audit shall review the adequacy of the company's processes for identifying, managing and reporting related party transactions. Internal Audit shall report any concerns it has regarding related party transactions or the company's framework for managing related party transactions directly to Audit Committee.
b) The External Auditors shall also review the RPTs and share their opinion on them with the Audit Committee.
4.4 DISCLOSURE AND REPORTING OF RELATED PARTY TRANSACTIONS
Every Related Party Transaction entered into by the Company shall be referred to in the Board's report to the shareholders along with justification for entering into such transaction. The Company Secretary and the Group Chief Financial Officer shall be, responsible for such disclosure. The Company Secretary shall also make necessary entries in the Register of Contracts required to be maintained by the Company. GCFO shall provide all shareholders with a certification that all Related Party transactions including all the transactions between the Company and/or its Subsidiaries and/or the Affiliated Companies and each of their respective Affiliates, if any, during that Financial Year, were on the basis of arm's-length arrangements.
5. SCOPE LIMITATION
In the event of any conflict between the provisions of this Policy and any other statutory enactments, rules, the provisions of such statutory enactments, rules shall prevail over this Policy.
6. DISSEMINATION OF POLICY Either this Policy or the important provisions of this policy shall be disseminated to all functional and operational employees and other concerned persons of the Company and shall be hosted on the intranet and website of the Company and web link thereto shall be provided in the annual report of the Company.
NOTICE OF INTEREST BY DIRECTOR / KEY MANAGERIAL PERSONNEL
The Company Secretary/ Compliance Officer
Myanma Awba Group Company Limited
95-A, Kyaik Wine Pagoda Road, 8th Mile,
Yangon, Union of Myanmar
I -------, son/daughter/spouse of -------- resident of --------.., holding ---------- Shares (equity or preference) of Kyat ______/- each (======.. percent of the paid-up Capital) in the Company in my name, being a --------- in the Company, hereby give notice that I am interested directly/ through my Relatives (Schedule) in the following company or companies, body corporate, firms or other association of individuals:
Name of the Nature of Interest or Shareholding
Date on which Companies/ Bodies concern / Change in Interest or Concern Corporate/Firms/ Interest or Concern arose/changed Association of Individuals
B. The Following are the Bodies Corporate whose Board of Directors, Managing Director or Manager is accustomed to act in accordance with any advice, directions or instructions;
Name of the Body Corporate
C. I am accustomed to act on the advice, directions or instructions of the following persons (other than advice, directions or instructions obtained in professional capacity).
Name of the person
SCHEDULE LIST OF RELATIVES
Address Shareholding in Awba Limited
2 Father (including Step-Father)
3 Son (including Stepson)
5 Daughter's Husband
6 Brother (Including Step-Brother)
7 Sister (Including Step-Sister)
8 Mother (including Step-Mother)
9 Son's Wife
INFORMATION TO BE PROVIDED TO THE AUDIT COMMITTEE / BOARD IN RELATION TO THE PROPOSED RELATED PARTY TRANSACTION (TO THE EXTENT RELEVANT TO THE TRANSACTION):
1. Name of the Related Party and nature of relationship;
2. Nature and duration of the contract/ transaction and particulars thereof;
3. Material terms of the contract or arrangement or transaction including the value, if any;
4. In case of existing or approved contracts, transactions, details of proposed variations to the duration, current price / value and / or material terms of the contract or arrangement including a justification to the proposed variations;
5. Any advance paid / received or to be paid / received for the contract or arrangement, if any;
6. Manner of determining the pricing and other commercial terms, whether or not included as part of contract;
7. Copy of the draft MOU, agreement, contract, purchase order or correspondence etc. if any.
8. Applicable statutory provisions, if any;
9. Valuation reports in case of sale or purchase or leasing / renting of capital assets or securities;
10. Justification as to the armâ€™s length nature of the proposed transaction;
11. Declaration whether the transaction is in the ordinary course of business;
12. Persons / authority approving the transaction; and
13. Any other information relevant or important for the Committee / Board to take a decision on the proposed transaction.