All RPTs as defined in this document in connection with the Company and its Subsidiaries and Affiliates.

Transcription

1 Revision Code: 1 Page 1 of 6 1 Statement of Policy This Policy of the Board sets out the Company s approach to Related Party Transactions (RPT). Definitions used in this Policy are set out at the end of this document. The Company and its Subsidiaries may enter into RPTs from time to time when these are in the best interests of the Company or its Subsidiaries. When the Company enters into RPTs, they should be: on an arm s length which must be for valuable consideration and on terms no less favourable than any such terms offered by unrelated third parties; with sufficient documentation; and subject to appropriate oversight of the Committee. Any RPTs entered into by the Company or its Subsidiaries must at all times comply with the requirements of the Corporation Code, its Articles of Incorporation and By-laws, Manual of Corporate Governance, Committee Charter and other related laws, rules and regulations of the Philippines and this Policy. 2 Objectives of this Policy Provide general guidelines on what constitutes RPTs; Manage Conflict of Interest situations and comply with Philippines regulatory and good governance practices; and Ensure that the appropriate process for approval of the transaction has been observed. 3 Scope of Policy All RPTs as defined in this document in connection with the Company and its Subsidiaries and Affiliates. 4 Related Party Transactions Categories This policy distinguishes between Exempt RPTs, Material RPTs and Prohibited RPTs. Each of these categories are defined and discussed below. document must not be reproduced or photocopied without prior approval of the.

2 Revision Code: 1 Page 2 of 6 5 Exempt RPTs 5.1 Exempt RPTs are RPT transactions of a non-material nature that only require reporting to, and ratification by, the Committee provided that such transactions meet the criteria otherwise set out in this Policy and in particular Paragraph 1. The following types of transactions are considered Exempt RPTs: a) Transactions in the ordinary course of business (whether individually or recurring transactions) that do not exceed PHP 50m per contract or transaction; b) Any payment of the company to its employees and management; c) Transactions in which the Related Party's interest is derived solely from the fact that he or she serves as a Director of another company or business unit that is a party to the transaction including LafargeHolcim group and its Affiliates; d) Transactions between the Company and its wholly owned Subsidiaries or LafargeHolcim group in connection with: the funding of operations of the Company's business units and projects, or other transactions with the objective of providing shared services and facilities (including IT, back office support, business service centers, finance, accounting and related reconciliation services or similar) or other commercial services designed to maximise operational efficiency, provided that any such arrangement does not exceed (either individually or in the aggregate) PHP 50m in any 12 month calendar period; and e) Transactions between the Company and a joint venture company where both the Company and its joint venture partner have approved the transaction. 5.2 It is acknowledged that by virtue of the Company s business, ordinary course operations (see paragraph 5.1 (a)) includes the purchase of electricity, clinker, raw materials, and any energy related products/services including those purchased from LafargeHolcim group companies and Affiliates. 5.3 Each Exempt RPT must be duly recorded by the Chief Financial Officer and may then be implemented provided that such transactions are subsequently reported to the Board on a regular basis. document must not be reproduced or photocopied without prior approval of the.

3 Revision Code: 1 Page 3 of 6 This recording and reporting process does not apply to transactions under paragraph 5.1 (b) which shall be handled according to the rules established by the Corporate Governance Committee of the Board. 6 Material RPTs 6.1 For the purposes of this Policy, a Material RPT is a transaction among Related Parties and the Company (or its Subsidiaries): a) with a total contractual value of more than PHP 50m, regardless of how the payment terms of the contract are structured (one-off, recurring, phased); or b) in which a Director or a member of the Management Committee is personally involved; or c) is otherwise not an Exempt RPT. 6.2 All Material RPTs, supported by a formal submission paper, must be submitted to the Committee for consideration and approval prior to the transaction. The submission for consideration and approval may be done through an actual meeting of the Committee or through a memo circulated to the members thereof. The Committee is entitled to reasonably request any further supporting documentation in order to determine whether the Material RPT under review is in the best interests of the Company (and otherwise complies with the relevant sections of this Policy (including paragraph 1). 6.3 When a Material RPT is submitted to the Committee for review and approval, the presence of at least two (2) independent directors is necessary to constitute a quorum of the Committee. In the case that a member of the Committee is affected by the RPT to be considered, this member shall not participate in the decision making process on the respective topic and he/she shall be replaced in such process by another member of the Board in order to achieve a quorum. 6.4 The Committee must notify all Directors of any RPTs approved and the basis for such approval. document must not be reproduced or photocopied without prior approval of the.

4 Revision Code: 1 Page 4 of 6 7 Prohibited RPTs 7.1 Notwithstanding any provision of this Policy to the contrary, the following RPTs are prohibited and must not be entered into by the Company or its Subsidiaries: a) loans and/or financial assistance to any Director; or b) loans and/or financial assistance to any employee (including the Management Committee), except when allowed pursuant to an established Company policy and under the supervision and according to the rules set by the Corporate Governance Committee of the Board. 8 Disclosure Requirements for RPTs and Conflict of Interest 8.1 The Company and Related Parties to whom this policy applies must comply with all disclosure requirements of RPTs mandated under applicable law, rules and regulations in the Philippines. 8.2 Each Director and member of the Management Committee is responsible for providing written notice to the Chief Financial Officer (CFO) of any potential RPT involving him or her or his or her Immediate Family Member, including any additional information about the transaction that may reasonably be requested by the Company. The Office of the CFO, by itself, or in consultation with the or external counsel, as appropriate, will determine whether the notified transaction does, in fact, constitute a RPT requiring compliance with this Policy. If there is still any doubt, the matter should be referred to the Committee. 8.3 In addition, each Director, each member of the Management Committee and each employee is required to complete annually a questionnaire relating to any RPTs (and those of their Immediate Family Members) and notify the Committee (in the case of Directors and members of the Management Committee) or the (in the case of an employee) of any Conflict of Interest. 9 Non compliance and sanctions 9.1 Non-compliance with any provision of this Policy, in particular, the reporting, approval and disclosure requirements, may result in the invalidation of an RPT contract. document must not be reproduced or photocopied without prior approval of the.

5 Revision Code: 1 Page 5 of Any officer or employee of the Company who has knowledge of any violation of this Policy must report this to the /Corporate Secretary who must in turn report all violations of this Policy to the Committee. 9.3 The Committee has the authority to recommend to the Board the invalidation of any contract in violation of this Policy. 9.4 This Policy shall be without prejudice to the provisions of the Code, the Manual and all related and relevant policies of the Company as well as applicable law and regulations in the Philippines which shall be observed and shall apply to the fullest extent possible. 10 Review of the Policy This Policy must be reviewed by the Board from time to time in order to reflect the requirements of applicable law, rules and regulations in the Philippines. 11 Effect 1 This Policy takes effect upon a resolution of the Board. 12 Definitions Affiliate means, with respect to a party, a Person which is directly or indirectly controlling, controlled by or under common control with such party. For the purpose of this definition, the term "control" shall mean ownership of at least fifty percent (50%) of the total issued and outstanding capital stock of, or the right to elect at least fifty percent (50%) of the number of directors in such Person, or the right to cause the direction of the management and policies of such Person whether through the ownership of shares, directorships, management, community of interest, or contract. Board means the board of directors of the Company. Company means Holcim Philippines Inc. Code means the LafargeHolcim Code of Business Conduct. Committee means the Audit Committee of the Company. 1 This Policy was approved by the Board in its meeting held on [.] document must not be reproduced or photocopied without prior approval of the.

6 Revision Code: 1 Page 6 of 6 Conflict of Interest means a situation when a Related Party appears to have a direct or indirect personal or financial interest in any transaction, which may deter or influence him from acting in the best interest of the Company. It is not required that there be an actual conflict, it is sufficient that conflict be seen to exist by an impartial observer. Director means a member of the Board of Directors of the Company. Management Committee means the governing body of the Company composed of the President and other officers of the Company having authority and responsibility for planning, directing, controlling or implementing the activities or transactions of the Company, directly or indirectly. Immediate Family Member means with respect to any Person, the relative of such Person up to the second degree of consanguinity or affinity. Manual means the Company s revised Manual of Corporate Governance pursuant to SEC Memorandum Circular No. 19 Series of 2016 issued on 22 November, Person means an individual, corporation, partnership, joint venture, unincorporated association, trust or other juridical entity or any Governmental Authority Related Party means with respect to the Company: a) Person/s that has or have control or joint control over the Company; b) Person/s that has or have significant influence over the Company; c) Person/s that is or are controlled by or under common control with the Company; d) The Directors and/or members of the Management Committee of the Company; and e) Any Immediate Family Member of a Director or member of the Management Committee of the Company. Reporting Entity means a person or Company preparing the financial statements. For purposes of this Policy, the Reporting Entity shall be the Company. Related Party Transactions or RPTs means a transfer of resources, services, or obligations between a Reporting Entity and among Related Parties, 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 entered into with an unrelated party that subsequently becomes a Related Party. Subsidiary means, with respect to any Person, an Affiliate more than fifty percent (50%) of the total issued and outstanding capital stock of which is directly or indirectly owned by that relevant Person. document must not be reproduced or photocopied without prior approval of the.