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Asirvad Micro Finance Limited (“the Company”) affirms good standard of governance practices and conducts its business in a fair and transparent manner duly complying with the applicable laws as in force. The Company is putting its best efforts consistently to enhance stakeholders long term value without compromising the corporate philosophy, ethics and standard of governance practices.
The Board of Directors (the “Board”) of the Company has adopted this Policy on Related Party Transactions (“Policy” or “RPT Policy”) upon the recommendation of the Audit Committee in compliance with the provisions of Section 188 of the Companies Act, 2013, read with rules made there under, and such other regulation, secretarial and accounting standards as may be applicable including any statutory modifications or reenactment thereof.
This Policy is intended to ensure due and timely identification, approval, disclosure and reporting of transactions between the Company and any of its Related Parties in compliance with the applicable laws and regulations as may be amended from time to time.
The provisions of this Policy are designed to govern the approval process and disclosure requirements to ensure transparency in the conduct of Related Party Transactions in the best interest of the Company and its shareholders and to comply with the statutory provisions in this regard.
“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.1
Pursuant to Section 2(76) of the Companies Act, 2013, related party with reference to a Company, means:
Provided that nothing in sub-clauses vi and vii shall apply to the advice, directions or instructions given in a professional capacity;
8. any body corporate which is a holding, subsidiary or an associate company of the Company;
9. any body corporate which is a subsidiary of a holding company to which it is also a subsidiary;
10. any body corporate which is an investing company or the venturer of the Company
For the purpose of clause x 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.
“Relative” means relative as defined under the Companies Act, 2013 and includes anyone who is related to another, if –
“Associate Company” means a company which 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 contractual arrangement whereby two or more parties undertake an economic activity which is subject to joint control.
“Control” shall include:
“Related Party Transaction” (“RPT”) means any transaction directly or indirectly involving any Related Party which is a 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:
“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:
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;
“Responsibility Officer” means the Chief Financial Officer (CFO) of the Company. The Board may, where it is considered necessary so to do, 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 Regulations 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.
All RPTs must be reported to the Audit Committee and referred for approval by the Committee in accordance with this Policy.
The Responsibility Officer shall at all times:
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 or her or his or 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 requiring compliance with 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.
RPTs, if any, will be referred to the Audit Committee for review and prior approval, wherever applicable.
The Audit Committee may grant Omnibus Approval for RPTs proposed to be entered into by the Company subject to the following conditions:
The omnibus approval in line with the Policy, which shall include the following, namely:
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.
Any Member of the Audit Committee who has a potential interest in any RPT will recuse himself or herself from meeting and abstain from discussion and voting and also not counted in the quorum of the meeting on the approval of the RPT.
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 thetransaction, 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:
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 authorised 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.
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.
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.
Notwithstanding the foregoing, the following RPTs shall not require approval of Audit Committee or Board or Shareholders:
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 has authority to modify or waive any procedural requirements of this Policy.
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.
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 disseminate this policy to all functional and operational heads and other concerned persons of the Company and shall be posted on website of the Company. Further, a web link thereto shall be provided in the Annual Report of the Company.
The rights to interpret/amend/modify this Policy vests in the Audit Committee/ Board of Directors of the Company. Further, this Policy shall be reviewed by the Audit Committee/ Board of Directors at least once every 3 (three) years and updated accordingly.
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.
This policy shall be reviewed and reassessed by the Audit Committee annually and appropriate recommendation shall be made to the Board.