Under the said Policy, transactions directly or indirectly involving a related party, where the amount involved is at least PhP 10Million Pesos, is a reportable related party transaction. The Bank adopted an expanded definition of related parties to include not only directors, officers, stockholders and related interests (DOSRI) as defined under the General Banking Law and related issuances and related parties as defined under International Accounting Standards 24 (IAS 24), but also second degree relatives by consanguinity or affinity of directors, officers, or stockholders. The expanded definition also includes advisory board members and consultants of the Bank, and directors and key officers of subsidiaries and affiliates of the Bank, among others.
Related parties, through the account officers, are required to notify the Related Party Transactions Committee of any potential related party transaction as soon as they become aware of it. If a transaction is determined to be a Related Party Transaction, such transaction, including all of the relevant details regarding such transaction, shall be submitted for analysis and evaluation to the Related Party Transactions Committee to determine whether or not the Related Party Transaction is on terms no less favorable to the Bank than terms available to any unconnected third party under the same or similar circumstances. The Related Party Transactions Committee is a board committee composed of at least three (3) members of the Board of Directors, including the chairman who is an independent director and who is not a member of the Audit Committee.
The transaction shall thereafter be presented to the Board for approval. Any member of the Board who has an interest in the transaction under discussion shall not participate in discussions and shall abstain from voting on the approval of the Related Party Transaction.
Mergers and acquisitions, divestitures and transactions of a similar nature which are not in the normal course of business as may be determined by the RPT Committee and where the amount involved is at least one percent (1%) of the unimpaired capital of the Bank, which are presented to the Board for approval, shall be accompanied by a fairness opinion issued by an independent adviser as well as other reports as the RPT Committee may deem necessary.
Pursuant to BSP Circular No. 749 as amended and the Bank's Corporate Governance Manual, the Bank's stockholders confirmed by majority vote, in the last annual stockholders meeting, the bank's significant transactions with its DOSRI and other related parties. Review of related party transactions is part of compliance testing of the Compliance Office as well as audit work program of the Internal Audit Group.