The Board of Directors of the Company adopts the following policy and procedures with regard to Related Party Transactions (defined below) (this “Policy”), in compliance with the requirements under section 188 of the Companies Act, 2013 read with Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in order to ensure the transparency and procedural fairness of such transactions.
1. Preamble
2. Objective
This Policy is intended to ensure the proper approval and reporting of transactions as applicable between the Company and any of its Related Party in the best interest of the Company and its stakeholders.
The provisions of this Policy are designed to govern the transparency of approval process and disclosures requirements to ensure fairness in the conduct of Related Party Transactions, in terms of the applicable laws. This Policy shall supplement the Company’s other policies in force that may be applicable to or involve transactions with related persons. Further, the Board may amend this Policy from time to time as may be required.
The Audit Committee of Board, shall review, approve and ratify Related Party Transactions based on this Policy in terms of the requirements under the above provisions.
The Board of Directors reserves the power to review and amend this Policy from time to time.Any exceptions to the Policy on Related Party Transactions must be consistent with the Companies Act, 2013 including the Rules promulgated thereunder and Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and must be approved in the manner as may be decided by the Board of Directors.
3. Transactions Covered by this Policy
Transactions covered by this policy include any contract or arrangement or transaction with a Related Party with respect to transactions defined as “Related Party Transaction” under Companies Act 2013 read with Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Provided that any transactions entered into by the Company with a Related Party in its ordinary course of business and on an arm’s length basis shall not require any approval of the Board of Directors/ Shareholders of the Company except in the case of Specific Related Party Transactions and Material Related Party Transactions (other than exempted Related Party Transaction, as defined in the policy. All Related Party Transactions shall be subject to the approval of the Audit Committee.
Provided further that, any transaction entered into by the Company with Related Party in its ordinary course of business and on an arm’s length basis, except Material Related Party Transactions and Specific Related Party Transactions for which proper procedure shall be followed as provided under this Policy, shall be periodically disclosed to the Board.
4. Identification of Potential Related Party Transactions
Company shall at all times maintain a database of Company’s Related Parties List containing the names of individuals and companies along with their personal/company details including any revisions therein.
The Related Party List shall be updated whenever necessary and shall be reviewed by the Audit Committee/Board at its first meeting in every financial year.
For the purpose of implementing the provisions under this Policy, the Board and the Audit Committee of Directors of the Company shall receive timely, full and sufficient information about the Related Party Transactions.
In determining, whether to approve or not a Related Party Transaction, the Audit Committee will take into account, among other factors, whether the said Transaction is in the interest of the Company and its stakeholders and there is no actual or potential conflict of interests between the Related Parties.
5. Review and Approval of Related Party Transactions
Audit Committee Approval:
As per approved terms of reference of Audit Committee by the Board, all Related Party Transactions must be reported/ referred to the Audit Committee of Board for approval /ratification. Any member of the Audit Committee who has a potential interest in any Related Party Transaction will rescue himself/herself and abstain from discussion and voting on the approval of the Related Party Transaction.
Before approving such transactions, the Audit Committee will look into the interest of the Company and its stakeholders in carrying out the Related Party Transactions and on the benefits. The Audit Committee may accordingly approve or modify such transactions, in accordance with this Policy and if applicable, further recommend the same to the Board/shareholders for approval.
For all Related Party Transactions proposed to be entered into by the Company, other than Exempted Related Party Transactions, the Audit Committee may grant an omnibus approval, subject to the following conditions:
(i) The Audit Committee shall lay down the criteria for granting the omnibus approval in line with this Policy and such approval shall be applicable in respect of transactions which are repetitive in nature.
(ii) The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of the Company;
(iii) Such omnibus approval shall specify (a) the name/s of the Related Party, nature of transaction, period of transaction, maximum amount of transaction that can be entered into, (b) the indicative base price / current contracted price and the formula for variation in the price if any and (c) such other conditions as the Audit Committee may deem fit; Provided that where the need for Related Party Transaction cannot be foreseen and aforesaid details are not available, Audit Committee may grant omnibus approval for such transactions subject to their value not exceeding Rs.1 crore per transaction.
(iv) Audit Committee shall review on a quarterly basis, the details of Related Party Transactions entered into by the Company pursuant to each of the omnibus approval given.
(v) Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.
In the case of other Related Party Transactions which are Exempted Related Party Transactions, the Audit Committee may fix up limits within which the management may carry out such Related Party Transactions without any approval of the Audit Committee. Further, it shall periodically review and assess such limits and revise the same as deemed proper and ensure that they are in compliance of this Policy and the guidelines herein.
6. Shareholders’ Approval:
All Material Related Party Transactions other than Exempted Related Party Transactions shall also require approval of the shareholders through a special resolution. Any shareholder who is a ‘Related Party’ will abstain from voting in relation to a Material Related Party Transaction irrespective of whether the shareholder is party to the particular transaction or not.
Under the requirements of Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in relation to the Company, a transaction with a Related Party will be a Material Related Party Transaction if the transaction/ transactions to be entered into individually or taken together with the previous transactions exceed 10% of annual consolidated turnover as per the latest audited financial statements of the Company.
7. Related Party Transactions without Prior Approval
In the event the Company becomes aware of a Related Party Transaction that has not been approved by the Audit Committee under this Policy prior to its consummation, the matter shall be reviewed by the Audit Committee. The Audit Committee shall consider all of the relevant facts and circumstances regarding the Related Party Transaction, and shall evaluate all options available to the Company, including ratification, revision or termination of the Related Party Transaction. The Committee shall also examine the facts and circumstances pertaining to the failure of reporting such Related Party Transaction to the Committee under this Policy, and shall take any such action it deems appropriate. In connection with any review of a Related Party Transaction, the Committee has authority to modify or waive any procedural requirements of this Policy.
In any case where the Committee determines not to ratify a Related Party Transaction that has been commenced without approval, the Committee, as appropriate, may direct additional actions including, but not limited to, immediate discontinuation or rescission of the transaction.
Where any Specific Related Party Transaction is entered into by a Director or any other employee, without obtaining the consent of the Board or approval by a special resolution in the general meeting, where required and if it is not ratified by the Board or, as the case may be, by the shareholders at a general meeting within 3 months from the date on which such contract or arrangement was entered into, such contract or arrangement shall be voidable at the option of the Board.
The Company may proceed against a Director or any other employee who had entered into such Specific Related Party Transaction in contravention of this Policy for recovery of any loss sustained by it as a result of such contract or arrangement and shall take any such action, it deems appropriate.
8. Registers
The Company shall keep and maintain a register, maintained physically or electronically, as may be decided by the Board of Directors, giving separately the particulars of all contracts or arrangements to which this Policy applies and such register is placed/taken note of before the meeting of the Board of directors.
Every director or key managerial personnel shall, within a period of thirty days of his appointment, or relinquishment of his office in other Companies, as the case may be, disclose to the Company the particulars relating to his/her concern or interest in the other associations which are required to be included in the register maintained.
The register to be kept under this section shall also be produced at the commencement of every Annual General Meeting of the Company and shall remain open and accessible during the continuance of the meeting to any person having the right to attend the meeting.
The register shall be preserved permanently and shall be kept in the custody of the Company Secretary /Chief Financial Officer of the Company or any other person authorized by the Board for the purpose.
9. Disclosures
Details of all Material Related Party Transactions are required to be disclosed quarterly along with the compliance report on corporate governance.
The Company shall disclose details of Related Party Transactions in its financial statements in accordance with the Accounting Standards.
If the Company enters into any Specific Related Party Transaction, then such contracts or arrangements shall be referred to in the Board’s report to the shareholders along with a justification for entering into such contract or arrangement.
10. Right to Amendment
The Company reserves its right to amend or modify this Policy in whole or in part, at any time without assigning any reason whatsoever. Modification may be necessary, among other reasons, to maintain compliance with applicable laws and/or to accommodate changes in relation to Related Party Transactions by the Company. Any Policy update or renewal would be communicated to all persons to whom this Policy is applicable.