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COMPANY RIGHTS

19.0 Company Rights

19.1 Affiliated Company Transactions

Sales, leases, licenses and other transfers of goods and services between the Company and its Affiliates shall be at an arm’s-length fee basis negotiated between the Parties in substantial accordance with the substantive principles and guidelines set forth in the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations published by the Organization for Economic Cooperation and Development or subsequent substantive guidelines having a similar purpose agreed to by the Parties.
Any discounts or commissions allowed in transactions between the Company and its Affiliates shall be no greater than the prevailing rate so that such discounts or commissions will not reduce the net proceeds below those which it would have received if the parties had not been Affiliates. Upon request of the State, the Company shall provide to the State documentation of the prices, discounts and commissions, and a copy of all contracts and other relevant documentation related to transactions with Affiliates.

Example 1
6.11 Arm’s-Length Commercialization and Marketing.
(a) [Party] shall have the right to export all products produced or obtained through its Operations without any limitation.
(b) [Party] shall sell the products derived from its Operations in accordance with generally accepted international business practices, at commercially reasonable prices, and on commercially reasonable terms compatible with world market conditions in the circumstances then prevailing.

Example 2
3. Rights to Export and Import and Arms’ Length Dealings

[…]

3.2 The Company may market and export without further reference to [Government] all Mine Products and shall have sole control and management of sale of such Mine Products, including the forward selling of such Mine Products, and shall assume all risks therefore, provided that:

(a) the Company sells its products on Arms’ Length Terms;
(b) [Government] has not notified the Company that the export of the Mine Products would:

(i) breach an obligation of [Government] arising under international law (including mandatory sanctions imposed by the United Nations); or
(ii) result in dealing or contracting with nationals of a state with which [Government] is in a state of declared war;

(c) manufacturers of processed and semi-processed goods involving copper content with processing facilities located in [Country] which are willing and able to purchase copper cathode at market prices not less than that or those otherwise available to the Company payable in US dollars to the Company’s account outside [Country] shall be afforded a preference over manufacturers whose processing facilities are not so located; provided that this obligation shall only apply to an amount of copper which does not exceed 10 per cent of the Company’s annual production from time to time; and
(d) no order has been made by the Minister pursuant to Section [x] of the Act.

Example 3
Section 20.6
20.6 Transactions with Affiliates. Neither the Concessionaire nor the Operating Company will enter into directly or indirectly any transaction or group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate, except in the ordinary course and pursuant to the reasonable requirements of its respective business and upon fair and reasonable terms no less favourable to it than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate. In addition, any transaction between the Concessionaire or the Operating Company, on the one hand, and an Affiliate or either of them, on the other hand, involving Product(s) shall be on the basis of competitive international prices and such other terms and conditions as would be fair and reasonable had the transaction taken place between unrelated parties dealing at arms’ length and shall otherwise comply with Section 15.2.

Example 4
3.3 The Company shall advise [Government] of each material agreement concerning sales or processing of Mine Products, patent licensing, engineering, construction or management services which is entered into with an Affiliate. Such agreements shall be on Arms’ Length Terms. Copies of such agreements shall be copied to [Government] upon request. If, in the opinion of [Government], any such agreement is not on Arms’ Length Terms, [Government] may, within thirty (30) days of receipt of such agreement, give notice to the Company of the terms which [Government] considers to be Arms’ Length Terms. If the Company disagrees with the terms so considered by [Government], it may refer the dispute to a Sole Expert (or arbitration panel) in accordance with Clause 18 for a determination as to what are Arms’ Length Terms. Upon receipt of the Sole Expert’s (or arbitration panel’s) determination, the Company shall renegotiate the agreement, if necessary, to embody those terms decided by the Sole Expert (or arbitration panel) to be Arms’ Length Terms or terminate the agreement.

REFER TO MMDA DISCLAIMERS AND MMDA USER’S GUIDE
PRIOR TO ANY USE OF THIS DOCUMENT.

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