• The BAC shall review the internal audit reports and will also review from time to time any related party transactions that may arise within the Group. If the BAC is of the view that the procedures are insufficient to ensure that RPTs and RRPTs are undertaken on an arm’s length basis and on normal commercial terms and on terms that are not more favourable to the transacting party than those generally available to public during their periodic review of the procedures, the BAC has the discretion to request for additional procedures to be imposed on the RPTs and RRPTs. • An interested/deemed interested Director in any particular RPTs or RRPTs shall be required to declare his or her interest in the RPTs or RRPTs and will have to refrain from any deliberation and also abstain from voting on the matter at the Board meeting in respect of that RPTs or RRPTs. • MISC’s Limits of Authority also reflect the relevant thresholds for the approval of RPTs or RRPTs. A process flow is also defined to articulate the necessary steps of the process. The RRPTs entered into by the Group during the financial year ended 31 December 2016 are summarised below:- Nature of Transaction Transacting Party Related Party 1. Provision of freight forwarding activities and/or logistics services to PETRONAS Group MISC Integrated Logistics Sdn. Bhd. (ceased as subsidiary of MISC on 24 October 2016) PETRONAS* 2. Purchase of lubricants and other petroleum products including bunker oil from PETRONAS Dagangan Berhad MISC and/or its subsidiaries PETRONAS* 3. Charters of petroleum and chemical tankers and LNG carriers from MISC by PETRONAS Group MISC and/or its subsidiaries PETRONAS* 4. Marine and consultancy Services** MISC and/or its subsidiaries PETRONAS* 5. Sungai Udang Port management** MISC and/or its subsidiaries PETRONAS* * PETRONAS is a major shareholder of the Company ** RRPTs come into view due to the acquisition of PETRONAS Maritime Services Sdn. Bhd. and its wholly-owned subsidiary, Sungai Udang Port Sdn. Bhd., by MISC. However, the amount of transactions did not exceed the threshold of the MMLR. The BAC has reviewed the internal guidelines pertaining to the governance of RPTs and RRPTs as outlined above and is of the view that the said guidelines are sufficient to ensure that the RPTs and RRPTs are fair, reasonable and in the best interest of the Group. The BAC was satisfied that the Group has put in place adequate procedures and processes to monitor, track and identify RPTs and RRPTs in a timely and orderly manner to ensure that the RPTs and RRPTs were, at all times, carried out on normal commercial terms and consistent with the Group’s practices and were not to the detriment of the minority shareholders. The procedures and processes will be reviewed from time to time based on recommendations from the internal audit team of the Company. The GIA has also conducted an audit on RPTs and RRPTs as at 31 December 2016 and reviewed the internal control process and records of RPTs and RRPTs within the affected scope to verify the procedures and relevant approvals have been obtained. The BAC is satisfied with the established procedures and the RPTs and RRPTs were fairly concluded on prevailing market rates/prices, normal commercial terms/conditions, applicable industry norms and not detrimental to the interests of MISC and its minority shareholders. The audit report was tabled to the BAC on 7 February 2017. The BAC also confirmed that the methods or procedures for determining the prices and terms of the RRPTs have not changed since the issuance of the Independent Adviser’s opinion by PricewaterhouseCoopers Capital Sdn. Bhd. dated 26 March 2012. The same was published in the Company’s Annual Report for the year ended 31 December 2012. This report is made in accordance with the resolution of the Board of Directors duly passed on 23 February 2017. Corporate Governance 153
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