ஆசிர்வாத் மைக்ரோபைனான்ஸ் லிமிடெட்          Asirvad Microfinance Limited          आशीर्वाद माइक्रोफिनॅन्स लिमिटेड         ആശിർവാദ് മൈക്രോഫിനാൻസ് ലിമിറ്റഡ്          ಅಸೀರ್ವಾಡ್ ಮಿಕ್ರೊಫಿನನ್ಸೆ ಲಿಮಿಟೆಡ್          ਅਸਿਰਵਾਦ ਮਿਕਰੋਫਈਨਂਸੇ ਲਿਮਿਟੇਡ          ଆଶୀର୍ବାଦ ମଇକ୍ରୋଫାଇନାନ୍ସ ଲିଃ          আশির্বাদ মাইক্রো ফাইনান্স লিমিটেড

Corporate Governance – Internal Guidelines

Corporate Governance – Internal Guidelines

1. Objective of Guidelines on Corporate Governance:
A Good corporate Governance practice is a key factor of sustainable corporate growth and maintains a long term relationships with the stakeholders of the Company. Asirvad is committed to highest level of corporate Governance practices and emphasizes the need for full transparency and accountability in all transactions, in order to protect the interests of its stakeholders. This enables the Company to attract high quality financial and human capital.
Asirvad Microfinance limited believes that a strong professionally balanced Board of Directors is necessary to ensure the highest standards of Corporate Governance; we have an appropriate mix of executive /non executive and independent directors in our Board. Board of Directors represents the shareholder’s interest in perpetuating a successful business and optimizing long term financial returns in a manner consistent with applicable regulatory and legal requirements and ethical considerations

2. Governance Structure:
A. Board of Directors (“Board”) The Directors are responsible to set strategic objectives for the management and to ensure that the long term interests of all stakeholders are served by adhering to and enforcing the principles of sound Corporate Governance. The role of the Board is to determine the overall strategic direction and management of the Company, including monitoring its performance. The Board is responsible to the shareholders and its conduct is determined by various provisions of the laws and the Articles of Association of the Company. In performing its duties, the Board meets regularly and acts in the best interests of the Company including Shareholders, employees & clients. The Board is an independent of the Management.

Composition:

The Company’s Board shall have an optimum combination of Executive, Non-Executive and Independent Directors in line with the requirements of the provisions of the Companies Act, 2013, and the Articles of Association of the Company.

Board Meetings:

The Board Meeting shall be held at least four times a year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board. The minimum information made available to the Board shall be furnished to the Directors. The Company also followed the secretarial standards with respect to Annual General Meeting and Board Meetings specified by the Companies Act and Institute of Company Secretaries of India.

B. Committees of the Board: The Board has constituted various Committees to deal with specific matters and for operational convenience, delegated powers for different functional areas to different Committees in accordance with applicable laws. The Audit Committee, Risk Management Committee, Nomination & Remuneration Committee and Asset Liability Management Committee have been constituted in accordance with the provisions of the Companies Act, 2013, Guidelines issued by Reserve Bank of India as applicable to the Company for internal and operational convenience. The composition, terms of reference and functioning of the Committee(s) shall be decided by the Board of Directors in accordance with the provisions of the applicable laws. The Minutes of the Board level Committee(s) as specified by the Board are placed before Board for its perusal, discussion and noting.

1. Audit Committee:

The Company shall have in place an Audit Committee of the Company constituted in accordance with the provisions of the Section 177 of the Companies Act, 2013 and the Rules framed there under and applicable provisions of the RBI Directions. The Audit Committee constitution and functioning shall be in compliance with the provisions of the Companies Act, 2013.

Composition:

The Audit Committee of the Company shall have minimum of three Directors with Independent Directors forming majority as prescribed by the Companies Act, 2013. They shall meet all applicable legal requirements with respect to independence, financial literacy, accounting or related financial expertise, etc. The members of the Audit Committee shall be appointed by the Board of Directors.

Meetings:
At least one meeting of the Committee shall be held per quarter including one prior to the finalization of the Annual Accounts.
Role of Audit Committee:

 The recommendation for appointment, remuneration and terms of appointment of Auditors of the Company;  Review and monitor the Auditor’s independence and performance, and effectiveness of Audit process;  Examination of the Financial Statement and the Auditors’ Report thereon;  Approval or any subsequent modification of transactions of the Company with related parties;  Security of inter-corporate Loans and Investments;  Valuation of undertakings or Assets of the Company, wherever it is necessary;  Evaluation of internal financial controls and risk management systems;  Monitoring the end use of funds raised through public offers and related matters.

2. Risk Management Committee:
The risk management framework is perhaps one of the most important parameters that define the success of a financial services organization. A risk management programme establishes a process of identifying and assessing the major risks covering all areas of the institution’s activities risk. The board of directors is responsible to ensure that management has implemented a risk management programme, that resources are allocated for risk management and internal controls, and that there is adequate oversight of the audit function as one of the board of director’s responsibilities.

Composition:
The Committee should have such members as approved by the Board. The Committee shall appoint one of its members as the Chairman of the Committee.


Meetings:
The Committee shall meet as and when required, but shall meet at least once a year. The minutes of the meetings shall be maintained by the Company Secretary.


Role of the Committee:
The role of the Risk Management Committee, inter-alia, shall include the following:
 Identification, monitoring and measurement of the risk profile of the Company (including market risk, operational risk, Compliance risk, credit risk, transactional risk etc.);
 overseeing its integrated risk measurement system;
 to analyze the critical decision for investments and corporate lending;
 Perform such other act, including the acts and functions stipulated by RBI and any other regulatory authority, as prescribed from time to time.

3. Nomination & Remuneration Committee
The Company shall have in place a Nomination & Remuneration Committee to meet the requirements of section 178 of the Companies Act, 2013 and the Rules framed there under. The Committee shall apart from other things review the appointments and removals of directors and senior management, the compensation related matters of the directors and senior management, evaluation of Directors performance, etc.

Composition:

The Nomination & Remuneration Committee of the Board shall be constituted in accordance with the provisions of section 178 of the Companies Act, 2013. The Committee shall appoint one of its members as the Chairman of the Committee.


Meetings:

The Committee shall meet as and when required. The minutes of the meetings shall be maintained by the Company Secretary.


Role of the Committee:

The role of the Nomination & Remuneration Committee, inter-alia, shall include the following:
 To identify persons who are qualified to become Directors and also who may be appointed in senior management positions in accordance with the criteria laid down and recommend to the Board their appointment and removal;
 To recommend the Board for the appointment of Directors, Key Managerial Personnel and Senior Management.
 To determine remuneration for Directors, Key Managerial Personnel, Senior Management Personnel and others employees.
 To recommend sitting fees for Directors.
 To evaluate the level and composition of remuneration to be reasonable and sufficient to attract, retain and motivate Directors.

A Policy for ensuring the fit and proper criteria for appointment of Directors is forming part of the Nomination and Remuneration Committee criteria and said Committee approves the and recommend to the Board appointment of Directors.

4. Asset Liability Management Committee
Asset Liability Management Committee is constituted to monitor the asset liability gap, strategize action to mitigate the risk associated, ensuring adherence to the limits set by the Board as well as for deciding the business strategy of the company (on the assets and liabilities sides) in line with the company’s budget and decided risk management objectives.


Composition:

The Committee should have such members as approved by the Board. The Committee shall appoint one of its members as the Chairman of the Committee.


Meetings:

The Committee shall meet every month.


Role of the Committee:

The role of the Asset Liability Management Committee, inter-alia, shall include the following:
 Management of the balance sheet of the Company:
 Review of the asset-liability profile of the Company with a view to manage the market exposure assumed by the Company
 Safeguarding the recovery positions at any point of time;
 Review of risk monitoring system, ensure payment of liability on its due dates, liquidity risk management, funding and capital planning, profit planning and growth projections, forecasting and analyzing different scenarios and preparation of contingency plans; and
 Perform such other allied functions as may be required from time to time.

Statutory Auditors

As per the Section 141 of the Companies Act, 2013, the Company shall have Statutory Auditors. The appointment of Auditor shall be recommend by Audit Committee to the Board for consideration, and thereafter Board recommend the same to the members in the Annual General Meeting for appointment.


ROTATION OF STATUTORY AUDITORS/AUDIT PARTNER(S)
The Company shall rotate the firms of statutory auditors and the audit partner(s) as per the provisions of the RBI guidelines and the Companies Act, 2013, as may be applicable. Internal Auditors As per the Section 138 of the Companies Act, 2013, the Company shall have an Internal Auditors. The appointment of Auditor shall be recommend by Audit Committee and subsequently approved by the Board. The Internal Auditor shall perform Independent and objective assessment of the internal controls, processes and procedures instituted by the Management and accordingly monitor its adequacy and effectiveness. Secretarial Auditors The Company shall appoint an Independent Company Secretary in Practice, in accordance with the provisions of the Companies Act, 2013 and rules made there under to conduct a Secretarial Audit of the Company for every Financial Year. The Secretarial Auditor shall provide in the form and the manner prescribed under the applicable laws / regulations. The Secretarial Audit Report shall be placed before the Board for its noting and records and the same be annexed to the Board’s Report which shall be circulated to the Shareholders of the Company in accordance with the applicable laws / regulations.

Code of Conduct for Directors & Senior Managerial Personnel

Company has lays down the Code of Conduct for Directors and Senior Managerial personnel. The Code is applicable to Executive/ Non-Executive Directors including Independent Directors and Senior Managerial Personnel of the Company.

Whistle Blower Policy / Vigil Mechanism

The Vigil (Whistle Blower) Mechanism is to ensure highest ethical, moral and business standards in the course of functioning and to build a lasting and strong culture of Corporate Governance within the Company. In terms of Policy, an internal mechanism is established for Directors and employees to report to the management, concerns about unethical behavior, actual or suspected fraud or violation of Company’s code of conduct. The policy is intended to encourage all Directors and employees of the Company to report suspected or actual occurrence of illegal, unethical or inappropriate actions, behaviors or practices by Directors/employees without fear of retribution. The Directors/ employees can voice their concerns on irregularities, malpractices and other misdemeanors through this Policy. It also provides necessary safeguards and protection to the Directors/employees who disclose the instances of unethical practices/ behavior observed in the Company. The mechanism also provides for direct access to the Chairman of the Audit Committee in exceptional case.

DISCLOSURE TO THE BOARD
The following disclosures shall be made to the Board of Directors at regular intervals as may be prescribed by the Board in this regard:
 progress made in putting in place a progressive risk management system, and risk management policy and strategy followed;
 conformity with corporate governance standards viz. in composition of various committees, their role and functions, periodicity of the meetings and compliance with coverage and review functions, etc.

Sd/-
S.V. Raja Vaidyanathan
Managing Director