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

Related Party Transaction Policy

1. Preamble 

The Related Party Transactions Policy provides a framework to regulate transactions between  Asirvad Micro Finance Limited (“Company”) and its Related Parties based on the applicable laws  and regulations applicable on the Company. 

2. Definitions 

“Related Party” means related party as defined in Regulation 2(1)(zb) of the Securities and Exchange  Board of India (Listing Obligations and Disclosures Requirements), Regulations, 2015 (‘SEBI Listing Regulations’), which inter alia provides that a “related party” means a related party as defined under  sub-section (76) of section 2 of the Companies Act, 2013 or under the applicable accounting standards. 

Further, any person or entity belonging to the promoter or promoter group of the Company and  holding 20% or more of the shareholding in the Company shall be deemed to be a related party. 

Pursuant to Section 2(76) of the Companies Act, 2013, related party with reference to a Company,  means: 

i. a Director or his relative ; 

ii. a Key Managerial Personnel (KMP) or his relative ; 

iii. a Firm, in which a director, manager or his relative is a partner ; 

iv. a Private Company in which a director or manager or his relative is a member or director; 

v. a Public Company in which a director or manager is a director and holds along with his  relatives, more than 2% (two per cent) of its paid-up share capital; 

vi. any body corporate whose board of directors, managing director, or manager is accustomed to  act in accordance with the advice, directions or instructions of a director or manager ;

vii. any person under whose advice, directions or instructions a director or manager is accustomed  to act; 

Provided that nothing in sub-clauses vi and vii shall apply to the advice, directions or  instructions given in a professional capacity; 

viii. any body corporate which is – 

A. a holding, subsidiary or an associate company of the Company; 

B. a subsidiary of a holding company to which it is also asubsidiary; 

C. an investing company or the venturer of the Company 

For the purpose of clause viii above, “the investing company or the venturer of a company”  means a body corporate whose investment in the Company would result in the Company  becoming an associate company of the body corporate. 

ix. Director (other than Independent Director) or Key Managerial Personnel (“KMP”) of the holding  company or his relative; 

“Relative” means relative as defined under the Companies Act, 2013 and includes anyone who is  related to another, if – 

i. They are members of a Hindu undivided family (HUF) ; 

ii. They are husband and wife ; or 

iii. Father (including step-father) 

iv. Mother (including step-mother) 

v. Son (including step-son)

vi. Son’s wife 

vii. Daughter 

viii. Daughter’s husband 

ix. Brother (including step-brother) 

x. Sister (including step-sister). 

“Associate Company” means a company in which the other company has significant influence but  which is not a subsidiary of the Company having such influence and includes a joint venture  company. 

“Significant Influence” means control of at least 20 (twenty) % of the total voting power or control  of or participation in business decisions under an agreement. 

“Joint Venture” means a joint arrangement whereby the parties that have joint control of the  arrangement have rights to the net assets of the arrangement. 

“Control” shall include: 

The right to appoint majority of the Directors or to control the management or policy decisions  exercisable by a person or persons acting individually or in concert, directly or indirectly,  including by virtue of their shareholding or management rights or shareholders’/voting  agreements etc.; 

“Related Party Transaction” (“RPT”) means any transaction directly or indirectly involving any  Related Party, which includes transfer of resources, services or obligations between the Company  and a related party, regardless of whether or not a price is charged, either single or a group of  transactions in a contract.

“Specific Related Party Transaction” shall mean any of the following transactions entered into by  the Company with any of its Related Parties which are, either not in the ordinary course of business  or not on arm’s length basis: 

a. sale, purchases or supply of any goods or materials; 

b. selling or otherwise disposing of, or buying, property of anykind; 

c. leasing of property of any kind; 

d. availing or rendering of any services; 

e. appointment of any agent for purchases or sale of goods, materials, services orproperty; 

f. such related party’s appointment to any office or place of profit in the company, its subsidiary  company or associate company; and 

g. underwriting the subscription of any securities or derivatives thereof, of the company. 

“Arm’s Length Transaction” means a transaction between two related parties that is conducted as if  they were unrelated, so that there is no conflict of interest. 

“Office or Place of Profit” means any office or place: 

i. where such office or place is held by a director, if the director holding it receives from the company anything by way of remuneration over and above the remuneration to which he is  entitled as director, by way of salary, fee, commission, perquisites, any rent free  accommodation, or otherwise; 

ii. where such office or place is held by an individual other than a director or by any firm, private  company or other body corporate, if the individual, firm, private company or body corporate  holding it receives from the company anything by way of remuneration, salary, fee,  commission, perquisites, any rent‐free accommodation, or otherwise;

“Responsibility Officer” means the Chief Financial Officer (CFO) of the Company. The Board may,  appoint such other officer as it may consider proper as such Responsibility Officer(s). 

“Applicable Laws” means the Companies Act, 2013 and the rules made thereunder, SEBI (Listing  Obligations and Disclosure Requirements) Regulations, 2015 and include any other statute, law,  standards, regulations or other governmental instruction relating to Related Party Transactions. 

All terms not defined herein shall take their meaning from the Applicable Laws.

3. Policy 

All RPTs must be reported to the Audit Committee and referred for approval by the Committee in  accordance with this Policy. 

4. Identification of Related Parties 

The Responsibility Officer shall at all times: 

a) Identify and keep on record list of Company’s Related Parties, along with their requisite details. The Responsibility Officer shall identify such functional heads, departmental heads and such  other employees (hereinafter referred as “Designated Employees”) who are responsible for  entering into contracts/ arrangements/ agreements with entities for and on behalf of the  Company and circulate the list of Related Parties to all such Designated Employees of the  Company along with the approval thresholds for entering into transactions with such Related  Parties. 

b) The Responsibility Officer shall also set down the mechanism for reporting of such transactions  proposed to be entered or entered with related parties by such Designated Employees as  specified in (b) above. 

c) The record of Related Parties shall be updated whenever necessary and shall be reviewed at  least once in every six months.

d) The Responsibility Officer shall be responsible for implementation and monitoring of the  Company’s RPT Policy at all times and submit a report to the Audit Committee periodically  for review. 

5. Identification of Potential RPTs 

Each Director, KMP and Senior Management Personnel (SMP) is responsible for providing notice to  the Board or Audit Committee of any potential RPT involving him/ her or his/ her Relative,  including any additional information about the transaction that the Board/Audit Committee may  reasonably request. 

The Board/Audit Committee will determine whether the transaction does, in fact, constitute a RPT  and requiring compliance of this Policy. 

The Company strongly prefers to receive such notice of any potential Related Party Transaction well  in advance so that the Audit Committee/Board has adequate time to obtain and review information  about the proposed transaction. In case of transactions entered without approval of Audit  Committee/ Board, the same shall be placed before the Committee/ Board for ratification as per the  provisions of Companies Act, 2013. 

6. Threshold limits & Materiality of RPT 

The Committee/ Board shall fix and approve the threshold limit for each individual transaction as  may be placed for approval from time to time. 

Further, the Audit Committee may also fix the threshold limits for the transactions under the omnibus  approval in the manner specified below.  

A transaction with a related party shall be considered material if the transaction(s) to be entered into  individually or taken together with previous transactions during a financial year, exceeds ten percent  of the annual consolidated turnover of the listed entity as per the last audited financial statements of  the listed entity.

7. Review and Approval of RPTs 

I. Audit Committee Approval 

RPTs, if any, will be referred to the Audit Committee for review and prior approval. 

Provided that only those members of the audit committee, who are independent directors, shall  approve related party transactions w.e.f January 01, 2022. 

The Audit Committee may grant Omnibus Approval for RPTs proposed to be entered into by the  Company subject to the following conditions: 

i. It shall, after obtaining approval of the Board of Directors, lay down the criteria for granting the omnibus approval in line with the Policy, which shall include the following, namely: 

(a) maximum value of the transactions, in aggregate, which can be allowed under the  omnibus route in a year; 

(b) the maximum value per transaction which can be allowed; 

(c) extent and manner of disclosures to be made to the Audit Committee at the time of  seeking omnibus approval; 

(d) review, at such intervals as the Audit Committee may deem fit, related party transaction  entered into by the company pursuant to each of the omnibus approval made; 

(e) transactions which cannot be subject to the omnibus approval by the Audit Committee. 

ii. The Audit Committee shall consider the following factors while specifying the criteria for  making omnibus approval, namely: 

(a) repetitiveness of the transactions (in past or in future); 

(b) justification for the need of omnibus approval. 

iii. It shall satisfy itself regarding the need for such omnibus approval for transactions of repetitive  nature and that such approval is in the interest of the Company.

iv. Such omnibus approval shall specify – 

∙ The name(s) of the related party, nature of transaction, period of transaction, maximum  amount of transaction that can be entered into; 

∙ The indicative base price / current contracted price and the formula for variation in the  price if any, and 

∙ Any other information relevant or important for the Audit Committee to take a decision  on the proposed transaction. 

Provided that where the need for RPT 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 (One) crore per transaction. 

v. It shall review, at least on a quarterly basis, the details of RPTs entered into by the Company  pursuant to each of the omnibus approval given. 

vi. Such omnibus approvals shall be valid for a period not exceeding 1 (one) financial year and  shall require fresh approvals after the expiry of 1 (one) financial year. 

vii. Omnibus approval shall not be made for transactions in respect of selling or disposing of the  undertaking of the Company. 

viii. Any other conditions as the Audit Committee may deem fit. 

In order to review a RPT, the Audit Committee will be furnished with all relevant material  information of the RPT, including the terms of the transaction, the business purpose of the transaction, the benefits to the Company and to the Related Party, and any other relevant matters. 

In determining whether to approve a RPT, the Audit Committee will consider the following factors,  among others, to the extent relevant to the RPT: 

➢ Name of the related party and the relationship

➢ Nature and duration of transaction and material terms including the value, if any 

➢ The manner of determining the pricing and whether the terms of the RPT are fair and on arm’s  length basis to the Company 

➢ Business rationale for such transactions. 

In case of transaction, other than transactions referred to in Section 188 of the Act, and where Audit  Committee does not approve the transaction, it shall make its recommendations to the Board.  Further, in case any transaction involving any amount not exceeding Rupees 1 (one) crore is entered  into by a director or officer of the Company without obtaining the approval of the Audit Committee  and it is not ratified by the Audit Committee within 3 (three) months from the date of the transaction,  such transaction shall be voidable at the option of the Audit Committee and if the transaction is with  the related party to any director or is authorized by any other director, the director concerned shall  indemnify the Company against any loss incurred by it. 

The requirement of obtaining Audit Committee approval or any subsequent modification of  transactions of the Company with related parties by the Audit Committee shall not apply to a  transaction, other than a transaction referred to in Section 188, between a holding company and its  wholly owned subsidiary company. 

II. Board Approval 

If the Audit Committee determines that a RPT should be brought before the Board, or it is mandatory  under any Applicable law for Board to approve a RPT, or in the case of Specific RPTs, then the  considerations set forth above shall apply to the Board’s review and approval of the matter, with  such modification as may be necessary or appropriate under the circumstances. 

III. Shareholder’s Approval 

If the Audit Committee and the Board determines that a RPT should be brought before the  Shareholders, or it is mandatory under any Applicable law for the shareholders to approve a RPT or  in case of material RPTs, then such shareholder approval, as may be necessary or appropriate under 

the circumstances, shall be obtained and the considerations set forth above shall apply to the  Shareholders’ approval of the matter. 

However, all material related party transactions shall require approval of the shareholders through  resolution and no related party shall vote to approve such resolutions whether the entity is a related  party to the particular transaction or not. 

8. RPTs not approved under this Policy 

In the event the Company becomes aware of a RPT with a Related Party that has not been approved  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 RPT,  and shall evaluate all options available to the Company, including ratification, revision or  termination of the RPT. The Audit Committee shall also examine the facts and circumstances  pertaining to the failure of reporting such RPT to the Committee under this Policy, and shall take any  such action it deems appropriate. 

In any case, where the Audit Committee determines not to ratify a RPT that has been commenced  without approval, the Audit Committee, as appropriate, may direct additional actions including, but  not limited to, immediate discontinuation or rescission of the transaction. The Audit Committee/  Board has authority to modify or waive any procedural requirements of this Policy with respect to  existing Related Party Transactions (RPTs) 

This Policy shall operate prospectively and all the agreements which have been entered before the  effective date of this Policy and are in accordance with the then prevailing laws shall be valid and effective. 

This Policy will be communicated to all Directors, KMPs, functional heads and other Designated  Employees of the Company. 

9. Disclosures/Amendment 

Necessary disclosures shall be made by the Company in its Annual Report as may be required under 

applicable laws. 

Pursuant to Section 134(3)(h) of the Companies Act, 2013, particulars of contracts or arrangements  with related parties referred to in Section 188 of the Companies Act, 2013 shall be disclosed in the  Director’s Report in the prescribed format. 

The Company shall disclose the Policy on dealing with Related Party Transactions (RPTs) on its  website. 

The rights to interpret/amend/modify this Policy vests in the Audit Committee/ Board of Directors  of the Company.  

Any matter not provided for in this Policy shall be handled in accordance with applicable laws, and  the Company’s Articles of Association. 

This Policy is in conformity with Applicable Laws. In case any clause /provision of this Policy is  inconsistent with Applicable Laws, the provisions of such Laws shall prevail. Any subsequent  amendment / modification in the Applicable Laws shall automatically apply to this Policy. 

10. Policy Review: 

This policy shall be reviewed and reassessed by the Audit Committee annually and appropriate  recommendation shall be made to the Board of Directors of the Company.