RELATED PARTY TRANSACTIONS POLICY
I. OBJECTIVE
This policy institutionalizes the related party transactions principles and policies of the Company (ASIA AMALGAMATED HOLDINGS CORPORATION). This serves as a reference by all the members of the Board as will as its Management in the conduct of their duties and responsibilities by the Company's stockholders, as well as other stakeholders.
The provisions in this policy promotes good corporate governance and protection of minority investors to its regulatory power under the RCC, SEC and SEC Memorandum Circular No. 19 and 10, series of 2016 and 2019, on the Code of Corporate Governance for Publicly Listed Companies and Rules on Material Related Party Transactions for Publicly Listed Companies, respectively.
II. TERMS
Corporate Governance - is the system of stewardship and control that guides the Company in fulfilling its long-term economic, moral, legal and social obligations towards its stockholders and other stakeholders which include, among others, customers, employees, suppliers, financiers, government and community in which it operates. Its purpose is to maximize the Company's long-term success, creating sustainable values to all involved.
Board of Director - the governing body elected by the stockholders that exercises the corporate powers of a corporation, conducts all its business and controls its properties.
Management - a group of executives given the authority by the Board to implement the policies it has laid down in the conduct of the business of the Company.
Independent Director - a person who is independent of management and the controlling stockholder, and is free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgement in carrying out his responsibilities as a Director.
Executive Director - a Director who as executive responsibilities of the day-to-day operations of a part or the whole of the Company.
Non-Executive Director - a Director who has no executive responsibility and does not perform any work related to the operations of the Company.
Related Party - shall cover the Company's subsidiaries, as well as affiliates and any party (including subsidiaries, affiliates and special purpose entities), that the Company exerts direct or indirect control or has significant influence over the Company, its Directors, officers, stockholders and related interests, and their close family members, as well as corresponding persons in affiliated companies. This shall also include such other persons or judicial entities whose interest may pose a potential conflict with the interest of the Company.
Related Party Transactions (RPT) - a transfer of resources, services, or obligations between a reporting entity and a related party, regardless of whether a price is charged. It should be interpreted broadly to include not only transactions that are entered into with related parties, but also outstanding transactions that are entered into with an unrelated party that subsequently becomes a related party.
Stakeholders - any individual, organization or society at large who can either affect and/or are affected by the Company's strategies, polices, decisions and operations, in general. This includes, among others, customers, creditors, employees, suppliers, investors, as well as the government and community in which it operates.
Internal Control - the system established by the Board and management for the accomplishment of the corporation's objective, the efficient operation of its business, the reliability of its financial reporting, and faithful compliance with applicable laws, regulations and internal rules.
Code - The Code of Corporate Governance for Publicly-listed Companies, SEC Memo Circular No. 19 Series of 2016 and rules on Material Related Party Transactions for Publicly-listed Companies, SEC Memo Circular No.10 Series of 2019.
III. POLICY
a. Possible and actual conflicts of interest between the Company and its Board and Management must be identified in all transactions and contracts entered into by the Company. In case such exists and it is determined that the contract or transaction is vital or beneficial to the Company, the approval process must be in consonance with established standards on Related Party Transactions.
b. "Related Party Transaction" means any financial transaction, arrangement or relationship, including indebtedness or guarantee of indebtedness, or any series of similar transactions, arrangements or relationships in which the Company or any of its subsidiary was, is or is proposed to be a participant and in which a Related Party has, had or may have a directly or indirect material interest.
c. The Company recognizes that Related Party Transactions can present potential or actual conflicts on interest and may raise questions about such transactions are consistent with the Company's and its stockholders' best interest. Policies mandating the review and approval the review and approval of Related Party Transactions should be adopted in order to set forth the procedures under which certain transactions must be reviewed and approved or ratified.
3.1 Related Party
"Related Party" means any of the following:
i. Director, nominee for Director or executive officer of the Company;
ii. Beneficial owner (other than a financial or investment institution) of more than 5% of the Company's voting securities;
iii. Immediate family member of a Director, executive officer, nominee for Director or beneficial owner of more that 5% of the Company's voting securities;
iv. An entity which is owned or controlled by someone who falls within the categories listed above; or
v. An entity in which someone listed above, in (i), (ii) or (iii), has a substantial ownership interest or control.
An immediate family member is any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of any Director, nominee for Director or executive officer of the Company.
3.2 Financial Benefit
A financial benefit is the giving of financial benefit indirectly thorough an interposed entity, making an informal, oral or non-binding agreement to give the benefit, and giving a benefit that does not involve paying money. Examples of giving a financial benefit to a Related Party includes the following:
i. Giving or providing the Related Party finance or property;
ii. Buying an asset from or selling an asset to the Related Party;
iii. Leasing an asset from or to the Related Party;
iv. Supplying services to or receiving services from the Related Party;
v. Issuing securities or granting an option to the Related Party; or
vi. Taking up or releasing an obligation of the Related Party.
3.3 Procedures
a. Every probable RPT should be reported for evaluation to the Board in consultation with Management and with an external advisor, as appropriate, to determine whether the transaction or relationship does, in fact, constitute a Related Party Transaction requiring compliance with this policy.
b. The Audit Committee shall be provided with the material facts of all new, existing, or proposed RPT including the terms of the transactions, whether those terms are on arms-length basis or such transaction shall be deemed pre-approved as described below in "Pre-Approved Transactions." It shall also determine whether to refer the RPT to the Board for consideration.
c. In assessing a RPT, the Board shall consider such factors as it deems appropriate including without limitation to the following:
i. The business reasons for the Company to enter into the RPT;
ii. The commercial reasonableness of the terms of the RPT;
iii. The materiality of the RPT to the Company;
iv. Whether the terms of the RPT are fair to the Company and on the same basis as would apply if the transactions did not involve a RPT;
v. The extend of the Related Party's interest in the RPT;
vi. If applicable, the impact of the RPT on a non-employee Director's independence; and
vii. The actual or apparent conflict of interest of the Related Party participating in the RPT.
d. In the event that the Board becomes aware of the RPT that was not previously approved or ratified under this policy, the Board will consider whether the RPT should be ratified or rescinded or other actions should be taken.
e. No Director shall participate in the evaluation or approval of any RPT for which he or she is a Related Party and will abstain from voting on the approval of the RPT, except that the Director shall provide all material information concerning the RPT to the Board and may otherwise participate in some or all of the Board's discussions if so requested by the Board.
f. If a RPT will be on-going, the Board may, in its discretion, establish guidelines for Management to follow in its on-going dealings with the Related Party. Thereafter, the Board shall periodically review and assess on going relationships with the Related Party to see that they are in Compliance with the Board's guidelines.
IV. PRE - APPROVED TRANSACTIONS
The following natures of transactions will be deemed to be pre - approved by the Board, will not be reviewed by the Board and do not require approval or ratification:
i. Transactions in the ordinary cause of business;
ii. Transactions in which the Related Party's interest is derived solely from the fact that he or she serves as Director of another corporation that is a party to the transactions;
iii. Transactions in which the Related Party's interest is derived solely from his or her direct or indirect ownership of an entity (other than a general partnership) that is a party to the transaction when such ownership interest is less that ten percent (10%) of the equity interest of such entity; and
iv. Transactions available to all employees generally.
V. MATERIAL TRANSACTIONS
Related party transactions amounting to ten percent (10%) or higher of the Company's total assets will be considered as a material related party transactions subject of the Board and rules set forth by the Code.
VI. DISCLOSURE
All RPT that are not exempt pursuant to the section entitled "Pre-Approve Transactions" shall be appropriately disclosed by the Company.
VII. WHISTLE - BLOWING POLICY
The Board shall adopt a whistle - blowing policy mechanism, outlining the procedure to allow employees to freely communicate their concerns about illegal and/or unethical practices without fear of retaliation. The mechanism shall also provide safeguards to secure the confidentiality of the informer. The Board may designate an Independent Director, who will handle whistle - blowing concerns.
The Company does not condone nor will it not tolerate any retaliation against an individual who lawfully and in good faith reports any misconduct or violations of this policy, Further, an employee who gives information regarding any conduct the employee reasonably believes constitutes a violation of the securities laws or financial fraud statutes (1) to any government authority, (2) testimony or otherwise in any proceeding pending or about to commenced concerning such violation or (3) to any person with supervisory authority over the employee or authorized by the Company to investigate such conduct, may not be discharged, demoted, discriminated or otherwise retaliated against bases upon the information they have provided.
Directors, officers and employees if asked, are expected to fully cooperate in internal and external investigations of any reported or alleged misconduct or violation of this policy.
VIII. MONITORING AND ASSESSMENT
Each Committee shall report regularly to the Board.
This policy shall be subject to an annual review unless the same frequency is amended by the Board.
All business processes and practices being performed within any department or business unit of the Company that are inconsistent with any portion of this policy is deemed revoked unless upgraded to the complaint extend.
IX. PENALTIES FOR NON-COMPLIANCE
To strictly observe and implement the provisions of this policy, the following penalties shall be imposed, after notice of hearing, on the Company's Directors, officers and staff in case of violation of any of the provision of this Policy.
In case of first violation, the subject person shall be reprimanded.
Suspension from office shall be imposed in case of second violation. The duration of the suspension shall depend on the gravity of the violation.
For third violation, the maximum penalty of removal from office shall be imposed.
The commission of a third violation of this Policy by any member of the Board of the Company shall be sufficient cause for removal from Directorship.
The Compliance Officer or Corporate Secretary shall be responsible for determining the violation(s) through notice and hearing and shall recommend to the Chairman of the Board the rightful penalty for such violation, for further review and approval of the Board.
X. GOVERNANCE AND SELF-RATING SYSTEM
In order to measure the performance of the Board, on an annual basis, the Board and all Board Committees of the Company shall accomplish the Self-Assessment Sheet. The results shall be consolidated and presented by the Compliance Officer to the Board through the Corporate Governance Committee.
If deemed needed by the Board, an external facilitator may be engaged to assist the Board in assessing its performance, individual directors, and Committees.
XI. REGULAR REVIEW OF THE CODE AND SCORECARD
To monitor the compliance by covered corporations either Revised Code of Corporate Governance, SEC may require the Company to accomplish annually a scorecard in the scope, nature and extent of the actions they have taken to meet the objective of the Code.