Related Party Transaction Committee
This Charter sets forth the guiding principles in the management of Related Party Transactions at Philippine Business Bank, Inc. (PBB). The Bank, its officers and staff are committed in ensuring that activities are conducted in accordance with all applicable laws, rules and regulations and highest ethical standards.
The Related Party Transaction Committee (RPT Committee) is created by the Board of
Directors of Philippine Business Bank to assist the Board in fulfilling its responsibility of
strengthening the corporate governance practices in the Bank, particularly on related
party transactions (RPT).
The RPT Committee shall have the following authorities:
- Review and endorse RPTs for Board approval in accordance with the RPT Guidelines and Procedures, including those that involve DOSRI;
- Formulate, revise/amend and endorse for Board approval policies on related party transactions;
- Conduct any investigation required to fulfil its responsibilities on RPTs;
- Consult at the Bank's expense such outside legal counsel, accounting or other advisers, consultants or experts as the Committee may consider necessary from time to time to carry out its duties; and
- Has access to all records of the Bank to perform its functions/resposibilities.
The RPT Committee shall:
- Assist the Board of Directors in assessing material agreements with a related party
that are covered by RPT regulations in determining whether to approve, ratify,
disapprove to reject a related party transaction;
- Evaluate on an ongoing basis existing relations between and among businesses and
counterparties to ensure that all related parties are continuously identified, RPTs are
monitored, and subsequent changes in relationships with counterparties (from non-related
to related and vice versa) are captured. Related parties, RPTs, and changes
in relationships shall be reflected in the relevant reports to the board and
- Evaluate and ensure that all RPTs: (i) are entered into on terms not less favorable to
the Bank when compared to the terms generally available to unaffiliated third party
under same or similar circumstances, (ii) will not result to misappropriation or
misapplication of corporate or business resources, (iii) will not result to exposure to
reputational risk. In evaluating RPTs, the Committee shall take into account, among
others, the following:
- The related party's relationship to the bank and interest in the transaction;
- The material facts of the proposed RPT, including the proposed aggregate value of such transaction;
- The benefits to the bank of the proposed RPT; and
- The availability of other sources of comparable products or services;
- Ensure that the bank shall have in place an effective price discovery system (i.e., bidding) to determine a fair price for RPTs.
- Ensure that appropriate disclosure is made, and/or information is provided to
regulating and supervising authorities relating to the bank's RPT exposures, and
policies on conflicts of interest or potential conflicts of interest. The disclosure shall
include information on the approach to managing material conflicts of interest that
are inconsistent with such policies; and conflicts that could arise as a result of the
bank's affiliation or transaction with other related parties;
- Report to the board of directors on a regular basis, the status and aggregate
exposures to each related party as well as the total amount of exposures to all
- Ensure that transactions with related parties, including write-off of exposures, are
subject to periodic independent review or audit process; and
- Oversee the implementation of the system for identifying, monitoring, measuring,
controlling, and reporting RPTs, including the periodic review of RPT policies and
The RPT Committee shall be composed of at least three (3) members of the Board of
Directors, two (2) of whom shall be independent directors, including the Chairperson.
The Committee shall at all times be entirely composed of independent directors and
non-executive directors, with independent directors comprising majority of the
members. The Chief Compliance Officer or Internal Auditor may sit as resource person
in said committee.
Each member of the RPT Committee shall be appointed on an annual basis.
The Committee shall meet on the 2nd Wednesday of every month and as frequently
considered necessary by the Chairperson.
The quorum shall be at least 51% of the regular members, one of which should be the
Chairperson of the committee or in his absence the designated vice-chairman, who shall
chair the meeting. A majority vote among the present shall be required to pass or
defeat any resolution at the meeting, provided such majority vote shall always include
the vote of the Chairperson or in his absence, the Vice Chairperson.
Approvals by the Committee may be made at or during its meetings or through
circulation to all members of the Committee.
The Board shall review and assess the adequacy of this charter annually.