ESR Group Limited Annual Report 2022 Directors’ Report 113 As the Borrower is an associate of certain Directors of the Company, the Borrower is a connected person of the Company under Listing Rule 14A.07. As the highest applicable percentage ratio in respect of the Loan when aggregated with the unsecured interest-bearing loans provided by the Company to the Guarantors in 2020 is more than 0.1% but less than 5%, the provision of the Loan (as defined below) constitutes a connected transaction of the Company which is exempt from the circular (including independent financial advice) and shareholders’ approval requirements pursuant to Listing Rule 14A.76(2). The Company, the Borrower and the Guarantors entered into the Loan Agreement on 24 October 2022 pursuant to which the Company agreed to lend to the Borrower a loan (the “Loan”) in the principal amount of up to US$50 million at an interest-rate equal to LIBOR plus 4.0% per annum. The Loan will be available to the Borrower for its working capital purposes from the date of the Loan Agreement for a maximum period of 18 months after the date on which the Loan is made. The Loan is guaranteed by the Guarantors and will be subject to security over the shares in the Borrower and an undertaking to seek additional security over the shares in an affiliate of the Borrower, in favour of the Company. The Company may use 50% of any amounts due from the Company to the Guarantors under any agreement to repay the principal amount of the Loan. The terms of the Loan Agreement were arrived at after arm’s length negotiations between the Company and the Borrower. The Loan was funded by the Group’s internal resources. On 11 December 2022, the Borrower submitted a formal notice to the Company that the Borrower will repay all amounts outstanding under the Loan Agreement, in full and final settlement of all amounts outstanding pursuant to the Loan Agreement, on or prior to 31 December 2022. Following such repayment made prior to 31 December 2022, the Loan Agreement was terminated on 31 December 2022 accordingly. RELATED PARTY TRANSACTIONS Parties are considered to be related if one party has the ability, directly or indirectly, control the other party or exercise significant influence over the other party in making financial and operation decisions. Parties are also considered to be related if they are subject to common control. Members of the Company’s key management and their close family member are also considered as related parties. For a discussion of related party transactions, see note 40 to the Consolidated Financial Statements. Directors believe that the related party transactions were carried out on an arm’s length basis and will not distort our results during the year ended 31 December 2022 or make such results not reflective of our future performance. All the related party transactions described in this note are exempt from the reporting, announcement or independent shareholders’ approval requirements under Rules 14A.76(1)(a) and (b) of the Listing Rules. CHARITABLE DONATIONS The charitable and other donations made by the Group for the year ended 31 December 2022 amounted to US$772,000 (2021: US$130,000). IMPORTANT EVENT AFTER THE REPORTING PERIOD Save for the information disclosed in note 48 to the Consolidated Financial Statements, there was no important event after the year ended 31 December 2022 and up to the date of this report. STRATEGIC REPORT FINANCIAL STATEMENT CORPORATE GOVERNANCE
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