NOMINATION & REMUNERATION

       

1. Introduction

The Board of Directors of Asirvad Micro Finance Limited (“the Company”) has constituted Nomination and Remuneration Committee in pursuant to Section 178 of the Companies Act, 2013, which is a combination of Non- Executive directors and Independent Directors. The Nomination and Remuneration Committee has formulated and recommended to the Board a policy called “Nomination & Remuneration Policy”. Framing of the Remuneration Policy is also mandated by the Companies Act, 2013.

The Committee has framed this policy to ensure the payment of equitable, competitive remuneration to all directors, Key Managerial Personnel (KMP) and employees of the Company which is based on individual performance, Company’s benchmark and Industry practices.

Key Principles of the Remuneration Policy

The following are the set of Principles act as guiding factors:

• The remuneration of KMPs and Senior Management shall be aligned with the policy of Holding Company.
• Minimize complexity and ensure transparency.
• Promote a culture of meritocracy and is linked to key performance and business drivers.
• Reflective of market competitiveness so as to attract the best talent.

Objective and purpose of the Remuneration Policy

The following are the key Objectives of the policy is given below:

• To guide the Board in relation to the appointment and removal of Directors, Key   Managerial Personnel and Senior Management.
• To evaluate the performance of the members of the Board and provide necessary report to the Board for further evaluation of the Board.
• To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.
• To ‘Pay for Performance’ i.e. the remuneration shall be linked to the performance and to strike the right balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the goals of the Company.
• To ensure compliances and maintain high standards to governance.

Appointment and Removal of Director, KMP and Senior Management Personnel

1.    Appointment Criteria and Qualifications

a)          The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or at Senior Management level and recommend to the Board his/ her appointment.
b)          A person should possess adequate qualification, expertise and experience for the position he / she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position. c)   The Company shall not appoint or continue the employment of any person as Director, Managing Director, Whole Time Director or Manager who has attained the age of seventy years. However, in case of Managing Director, Whole Time Director or Manager, who has attained the age of seventy years his/ her appointment may be made by passing a special resolution
d)         Independent Directors/ Non- Executive Directors should be between 35 to 75 years of age.
e)       The Committee shall undertake a process of Due Diligence based on the criteria of qualification, technical expertise, track record, integrity etc and shall ensure that proposed or existing Director meets the fit and proper criteria as prescribed by the Reserve Bank of India.

2.    Tenure
a)    Managing Director / Whole-time Director:

The company shall appoint or re-appoint any person as its Executive Chairman, Managing Director or Executive Director for a term not exceeding five years at a time. No re-appointment shall be made earlier than one year before the expiry of term.

b)   Independent Director:

An Independent Director shall hold office for a term up to maximum five consecutive years on the Board of the Company and will be eligible for re-appointment for a another term of maximum five year on passing of a special resolution by the Company. The Independent Director shall not retire by rotation.

The Chairman/ Managing Director of the Company shall issue and sign the appointment letter of Independent Directors.

3.    Removal

Due to reasons for any disqualification mentioned in the Act or under any other applicable Act, rules and regulations there under, the Committee may recommend to the Board with reasons recorded in writing, removal of Director, KMP or Senior Management Personnel subject to the provisions and compliance of the said Act, rules and regulations.

No Director shall continue on the Board after attaining the age of 75 years.

Remuneration to the Directors, KMP and Senior Management Personnel.

 i) Executive Directors and Non- Executive Directors / Independent Directors.

• The remuneration and commission of executive and non- executive directors/ independent Director shall be recommended by the Nomination and Remuneration Committee to the Board of Directors, and shall be subject to the subsequent approval by the Shareholders at the general meeting and Central Government, as the case may be.
• The remuneration for Executive Directors shall be arrived by considering various factors such as qualification, experience, expertise, prevailing remuneration in the industry, future contribution. The elements of the remuneration and limits are applicable as defined in the Companies Act, 2013.
• The remuneration of Executive Directors shall be divided into two components i.e. fixed and variable. The fixed component comprises salary, allowances, perquisites, provident fund, gratuity etc. The variable component comprises annual performance pay which may be fixed amount as decided by the Board. In addition to this, the Executive Director may also be offered and allotted shares under Employee StockOption Scheme (ESOS) of the Company.
• The Non-Executive and Independent Directors of the Company would be paid sitting fees within the permissible limits prescribed under the Companies Act, 2013 and rules framed thereunder for attending meetings. The sitting fee shall be decided by the Board from time to time.
• In case of profits/adequate profits, the Directors may also be paid remuneration by way of Commission as defined in the Companies Act, 2013.The Committee shall recommend to the Board for the payment of Commission to Directors. The Board of Directors shall decide the actual amount to be paid to each Independent Director based on factors such as meetings attended by the Director, time and effort put in and contribution made them.
• Independent Directors shall not be entitled to stock options.

ii)    Key Managerial Personnel and Senior Management

• The Remuneration for the Key Managerial Personnel, Senior Management and Employees of the Company would be guided by the Industry Standard and internal policy of the Company. The remuneration structure is broadly divided into fixed and variable components. The fixed component comprises salary, allowances, perquisites, PF etc. The variable component comprises annual performance of the Individual employee. In addition to this, the Company also has an Employee Stock Option Scheme (ESOS), pursuant to which, equity shares of the Company may be offered and allotted to the employees identified by the Committee.
• Senior Management means officer / personnel of the Company who are members of its core management team. The core management team includes Chief Operating Officer (COO), Head- HRD, Chief Technology Officer (CTO) and Head- MSME.
• Internally, performance ratings of all Employees would be spread across a normal distribution curve. The rating obtained by an employee will be used as an input to determine Variable and Merit Pay increases. Variable and Merit pay increase will be calculated using a combination of individual performance and organizational performance. Compensation can also be determined based on identified skill sets critical to success of our organization. It is determined as per management’s review of market demand and supply, Industry benchmarks etc.

Membership & Quorum:

The Committee shall consist of minimum 3 non-executive directors, majority of them being independent. The quorum of the committee shall be one-third of its total strength or two members which ever is higher.

Chairperson:

1. The Chairman of the committee shall be appointed by the Board. In case of absence of Chairman, the members of the Committee shall elect among them to act as Chairman.
2. Chairman of the Company may be appointed as a member of the Committee but shall not be a Chairman of the Committee.
3. Chairman of the Nomination and remuneration Committee meeting could be present at the Annual General Meeting or may nominate some other member to answer the shareholders’ queries.

Frequency of Meetings

The meeting of the Committee shall be held at such regular intervals as may be    required.

                                                                                                                           Sd/-
S.V. Raja Vaidyanathan
Managing Director