PREAMBLE
The Board of Directors (the ‘ Board”) of Mirpurkhas Sugar Mills Limited (the “Company”) has adopted this Poiicy pursuant to the provisions of Section 208 of the Companies Act, 2017 read with Regulation No. 15 of the Listed Companies (Code of Corporate Governance) Regulations, 2019 and the Companies (Related Party Transactions and Maintenance of Related Records) Regulations, 2018 issued by Securities & Exchange Commission of Pakistan.

SCOPE OF THE POLICY
This Policy applies to transactions between the Company and one or more of its Related Parties. It provides a framework for governance and reporting of Related Party Transactions. It is intended to ensure due and timely identification, approval, disclosure and reporting of transactions between the Company and any of its Related Parties. Amendments, from time to time, to the Policy, if any, shall be considered and approved by the Board. The policy covers all related party transactions of Mirpurkhas Sugar Mills Limited as defined under Section 208 of the Companies Act, 2017. The policy is applicable on all individuals responsible to initiate, authorize, record and report related party transactions.

The Policy is applicable to all Related Party Transactions irrespective of their value and size.

This Policy is intended to work in conjunction with regulatory provisions and other Company policies.

DEFINITIONS
(i) Arm’s length transaction means a transaction which is subject to such terms and conditions as if it is carried out in a way, as if:

1. the parties to the transaction were unrelated in any way;
2. the parties were free from any undue influence, control or pressure;
3. through its relevant decision-makers, each party was sufficiently knowledgeable about the circumstances of the transaction, sufficiently experienced in business and sufficiently well advised to be able to form a sound business judgment as to what was in its interests; and
4. each party was concerned only to achieve the best available commercial result for itself in all the circumstances.

(ii) Office of profit means any office:

1. where such office is held by a Director, if the Director holding it receives from the company anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise.
2. where such office is held by an individual other than a Director or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from the Company anything by way of remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise.

(iii) Related party includes

1. A Director or his / her relative;
2. a key managerial personnel or his relative; a key managerial person shall mean the following;
   • the Chief Executive Officer of the Company;
   • the Company Secretary of the Company;
   • the whole time Directors on the Board of the Company; and
   • the Chief Financial Officer of the Company.
3. a firm, in which a Director, manager or his relative is a partner;
4. a private company in which a Director or manager is a member or director;
5. a public company in which a Director or manager is a Director or holds along with his relatives, any shares of vits paid up share capital;
6. anybody corporate whose Chief Executive or manager is accustomed to act in accordance with the advice, directions or instructions of a Director or manager;
7. any person on whose advice, directions or instructions, a Director or manager is accustomed to act:
8. any company which is:
   • a holding, subsidiary or an associated company of such company; or
   • a subsidiary of a holding company to which it is also a subsidiary
9. such other person as may be specified.
10. relative means spouse, siblings and lineal ascendants and descendants of a person.

Provided that nothing in sub-clauses (f) and (g) shall apply to the advice, directions or instructions given in a professional capacity.
*All other terms will be construed as per the Companies Act, 2017 and all other relevant laws,

Types of Related Party Transactions
Any contract or arrangement with respect to the following, but not limited to these;

1. sale, purchase or supply of any goods or materials;
2. selling or otherwise disposing of, or buying, property of any kind;
3. leasing of property of any kind;
4. availing or rendering of any services;
5. appointment of any agent for purchase or sale of goods, materials, services or property; and
6. such related party’s appointment to any office or place of profit in the company, its or associated company, provided:
   1. where majority of the Directors are interested in any of the above transactions, the matter shall be placed before the general meeting for approval as special resolution;
   2. also that nothing in this sub-section shall apply to any transactions entered into by the Company in its ordinary course of business on an arm’s length basis.

Disclosure and Approval of Related Party Transactions
The Board shall approve related party transactions that require its approval and the following minimum information shall be circulated and disclosed to the directors along with agenda for Board’s meeting called for approval of related party transactions:

1. name of related party;
2. names of the interested or concerned persons or Directors;
3. nature of relationship, interest or concern along with complete information of financial or other interest or concern of Directors, managers or key managerial personnel in the related party;
4. detail, description, terms and conditions of transactions;
5. amount of transactions;
6. timeframe or duration of the transactions or contracts or arrangements;
7. pricing policy;
8. recommendations of the Audit Committee, where applicable; and
9. any other relevant and material information that is necessary for the Board to make a well informed decision regarding the approval of related party transactions.

Identification of Related Party Transactions
Every Director will be responsible for providing a notice containing the following information to the Board of Directors on an annual basis:

1. a firm, in which the Director, manager or his relative is a partner;
2. a private company in which the director or manager is a member or Director;
3. a public company in which the Director or manager is a Director or holds alongwith his relatives, any shares of its paid up share capital;
4. any body corporate whose Chief Executive or manager is accustomed to act in accordance with the advice, directions or instructions of the Director or manager;
5. iv. any body corporate whose Chief Executive or manager is accustomed to act in accordance with the advice, directions or instructions of the Director or manager;

Terms of the policy
The terms of reference for the Policy are as follows;

1. The management shall obtain approval of the policy by the Board of Directors (“Board”);
2. The management may enter into any contract or arrangement with a related party only in accordance with the policy approved by the Board, subject to such conditions as may be specified;
3. The management shall obtain approval of the Board for contracts that are not on arm’s length basis or not in the ordinary course of business;
4. The management shall present all related party transactions to the Audit Committee for their recommendation to the Board for approval;
5. Every contract or arrangement entered into with a Related Party shall be referred to in the Board‘s report to the shareholders along with justifications;
6. Management shall maintain records of the transactions undertaken with related parties;
7. If a Director or any other employee enters into any contract or arrangement with a Related Party without obtaining the consent of the Board or approval by a special resolution in the general meeting, and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting within 90 days from the date of the contract, such contract or arrangement shall be voidable at the discretion of the Board;

Maintenance of Record
The Company shall maintain one or more registers with regards to transactions undertaken with Related Parties and contracts or arrangements in which Directors are interested, in the manner prescribed, and shall enter therein the particulars of:

1. contracts or arrangements, in which any Director is, directly or indirectly, concerned or interested; and
2. contracts or arrangements with a related party with respect to transactions to which section 208 of the Companies Act, 2017 applies.

Pricing Methodology
Any related party transactions carried out at arm’s length basis shall use one of the following pricing methodologies:

1. Comparable Uncontrolled Price method;
2. Resale Price method;
3. Cost Plus method; and
4. Profit Split method

Scope of Limitation
In the event of any conflict between the provisions of this Policy and the Companies Act, 2017 or any other statutory enactments, rules, the provisions of the Companies Act, 2017 or statutory enactments, rules shall prevail over this policy.