Board Related Party Transactions Review Committee Report

Composition of the Committee

The Board appointed Related Party Transactions Review Committee (BRPTRC), with a combination of Executive and Independent Non-Executive Directors, as stipulated by the Code of Best Practices on Related Party Transactions, issued by the Colombo Stock Exchange (CSE).

The BRPTRC as at the end of the year comprised the following members:

Mr. K.G.D.D. Dheerasinghe (Chairman)
Mr. S Swarnajothi (Director)
Mr. J Durairatnam (Managing Director/CEO)
Mr. S Renganathan (Executive Director/COO)

Mr. K.G.D.D. Dheerasinghe, the Chairman of the Bank and Mr. S. Swarnajothi, the Chairman of the BAC, are independent Non-Executive Directors.

Mr. L.W.P. Indrajith, the Assistant General Manager - Finance of the Bank, functions as the Secretary of the Committee.

Brief profiles of each member of the Committee are given on this section.

Terms of Reference of the Committee

The BRPTRC was formed by the Board at the end of 2014, to assist the Board in reviewing all Related Party Transactions (RPT) carried out by the Bank and its listed companies in the Group, by early adopting the Code of Best Practice on Related Party Transactions, as issued by the CSE, which is mandatory from January 01, 2016.

The mandate of the Committee includes inter-alia the following:

• Developing and recommending for adoption by the Board of Directors of the Bank and its listed subsidiaries, a RPT Policy consistent with that proposed by the CSE.
• Updating the Board of Directors on the RPT of each of the listed companies of the Group.
• Making immediate market disclosures on applicable RPT, as required by Section 9 of the Continuing Listing Requirements of the CSE.
• Making appropriate disclosures on RPT in the Annual Report, as required by Section 9 of the Continuing Listing Requirements of the CSE.

The Committee will schedule quarterly meetings to review and report to the Board, on matters involving RPT falling under its Terms of Reference.

Activities in 2015

A Committee meeting was held during the year, to review and to recommend the RPT Policy to the Board. The attendance of the Committee members at the meeting is given on Table 4. Proceedings of the Committee meetings were regularly reported to the Board of Directors. In addition, the Board of Directors was updated on the RPT of each of the listed companies of the Group, on a quarterly basis.

During 2015, a comprehensive RPT Policy was developed and disseminated among relevant stakeholders, after obtaining the approval of the Board of Directors.

The following types of related party transactions are brought to the attention of the Board for approval:

• Requests for any credit facility or any other form of accommodations for Directors or their Close Family Members, as recommended by the BRPTRC.
• Requests for any credit facility or any other form of accommodations for entities, in which a Director of the Bank, holding more than 10% of its paid up capital, as recommended by the BRPTRC.

Any member of the Committee, who has an interest in a RPT under discussion, shall abstain from voting on the approval of such transaction, but may, if so requested by the Chairman of the Committee, participates in some or all Committee's discussions on such transactions. Upon completion of its review of the transaction, the Committee may determine to permit or to prohibit the RPT.

A RPT entered into without pre-approval of the Committee, shall not be deemed to violate this Policy, or be invalid or unenforceable, so long as the transaction is brought to the Committee as promptly as reasonably practical, after it is entered into or after it becomes reasonably apparent that the transaction is covered by this Policy. As such, all RPT, other than the exempted transactions, will be reviewed either prior to the transaction being entered into or if the transaction is expressed to be conditional on such review, prior to the completion of the transaction.

K.G.D.D. Dheerasinghe
Chairman - Related Party Transactions Review Committee

Colombo
February 24, 2016