POLICY ON RELATED PARTY TRANSACTIONS

Transcription

1 GATI LIMITED Reg. Office: Plt N.20, Survey N.12, Kthagua, Knapur, Hyeraba CIN: L63011TG1995PLC Tel: , Fax: Website: investr.services@gati.cm POLICY ON RELATED PARTY TRANSACTIONS 1

2 TABLE OF CONTENTS S. N Details Page N 1 Preamble 3 2 Scpe f the plicy 3 3 Objective f the plicy 4 4 Definitins 4 5 Materiality 7 6 Manner f ealing with Relate Party Transactins 7 7 Relate Party Transactins nt apprve uner this plicy 9 8 Disclsures 9 2

3 1. PREAMBLEnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn The Cmpanies Act, 2013 (the Act) rea with the Cmpanies (Meetings f Bar an its Pwers) Rules, 2014 (Rules) intruce specific prvisins relating t relate party transactins an efine the term relate parties, (material) relate party transactins, relatives an key management persnnel. The Act an the Rules have als lai wn the financial limits an the apprval prcess fr such transactins. In aitin, the Securities an Exchange Bar f Inia (SEBI) reviewe the prvisins f the Listing Agreement vis-a-vis the Cmpanies Act, 2013 an with the bjectives t align with the prvisins f the Cmpanies Act, 2013, apt best practices n crprate gvernance an t make the crprate gvernance framewrk mre effective, revise Clause 49 f the Listing Agreement. Pursuant t the revise Clause 49 VII C f the Listing Agreement (Clause 49), all the liste cmpanies nee t frmulate a plicy n materiality f relate party transactins an als a plicy n ealing with relate party transactins This plicy is frame pursuant t the requirement f sub clause VII (C) f revise Clause 49 f the Equity Listing Agreement by the Securities Exchange Bar f Inia (SEBI) vie CIR/CFD/POLICY CELL/2/2014 ate April 17, 2014 with the bjective t align with the prvisins f the Cmpanies Act, 2013, apt the best practices n crprate gvernance an make the crprate gvernance framewrk mre effective. A relate party transactin is a transfer f resurces, services r bligatins between a Cmpany an a Relate party, regarless f whether price is charge r nt an inclues thse transactins as efine uner Sectin 188(1) f the Cmpanies Act 2013 an inclue in the DEFINITIONS belw. This plicy is aime t regulate the transactins between the Cmpany an its Relate Parties base n the applicable laws an regulatry prvisins gverning the Cmpany s peratins. The plicy is intene t ensure prper apprval an reprting f transactins between the Cmpany an its Relate Parties. Such transactins are apprpriate nly if they are in the best interest f the Cmpany an its stakehlers. The Cmpany is require t isclse every year in the Financial Statements, certain transactins between the Cmpany an Relate Parties as well as plicies cncerning transactins with Relate Parties. The Bar f Directrs (the Bar ) f Gati Limite (the Cmpany r PFL ), has apte the fllwing plicy with regar t Relate Party Transactins as efine belw, effective Octber 1, The Auit Cmmittee will review an may amen this plicy frm time t time. 2. SCOPE OF THE POLICY mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm Relate party transactins can present a ptential r actual cnflict f interest which may be against the best interest f the cmpany an its sharehlers. Cnsiering the requirements fr apprval f relate party transactins as prescribe uner the Cmpanies Act, 2013 ( Act ) rea with the Rules frame there uner an Clause 49 f the Listing Agreement (as amene by SEBI Circulars ate April 17, 2014 an September 15, 2014), Gati Limite ( Gati ) has frmulate guielines fr ientificatin f relate parties an the prper cnuct an cumentatin f all relate party transactins. Als, Clause 49(VII)(C) f the Listing Agreement requires a cmpany t frmulate a plicy n materiality f relate party transactins an ealing with relate party transactins. 3

4 In light f the abve, Gati has frame this Plicy n Relate Party Transactins ( Plicy ). This Plicy has been apte by the Bar f Directrs f the Cmpany base n recmmenatins f the Auit Cmmittee. Ging frwar, the Auit Cmmittee wul review an amen the Plicy, as an when require, subject t the apprval f the Bar. 3. OBJECTIVE OF THE POLICY nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn The bjective f this Plicy is t set ut (a) the materiality threshls fr relate party transactins an; (b) the manner f ealing with the transactins between the Cmpany an its relate parties base n the Act, Clause 49 f the Listing Agreement an any ther laws an regulatins as may be applicable t the Cmpany. 4. DEFINITIONS wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Relate Party Transactin: Relate Party Transactin is a transfer f any resurces, services r bligatins between the Cmpany an a relate party, regarless f whether a price is charge. (A transactin with a relate party shall be cnstrue t inclue single transactin r a grup f transactins in a cntract). Term Relate Party Definitin Uner Clause 49 f the Listing Agreement with the Stck Exchanges an entity shall be cnsiere as relate t the cmpany if: a. such entity is a relate party uner Sectin 2(76) f the Cmpanies Act, 2013; r b. such entity is a relate party uner the applicable accunting stanars. As per Accunting Stanar 18: i. enterprises that irectly, r inirectly thrugh ne r mre intermeiaries, cntrl, r are cntrlle by, r are uner cmmn cntrl with, the reprting enterprise (this inclues hling cmpanies, subsiiaries an fellw subsiiaries); ii. assciates an jint ventures f the reprting enterprise an the investing party r venture in respect f which the reprting enterprise is an assciate r a jint venture; iii. iniviuals wning, irectly r inirectly, an interest in the vting pwer f the reprting enterprise that gives them cntrl r significant influence ver the enterprise, an relatives f any such iniviual; iv. key management persnnel an relatives f such persnnel; an v. Enterprises ver which any persn escribe in (c) r () is able t exercise significant influence. This inclues enterprises wne by irectrs r majr sharehlers f the reprting enterprise an enterprises that have a member f key management in cmmn with the reprting enterprise. Sectin 2(76) f the Act: a. A irectr r his relative b. Key Managerial Persnnel r his/ her relative c. A firm, in which a irectr, manager r his relative is a partner. A private cmpany in which a irectr r manager r his relatives is a member r irectr e. A public cmpany in which a irectr r manager is a irectr an hls alng with his relatives, mre than 2% f its pai-up share capital f. A by crprate whse bar, managing irectr r manager is accustme t act in accrance with the avice, irectins r instructins f a irectr r manager, except such 4

5 Relatives Assciate Cmpany Hling Cmpany Subsiiary Cmpany Key Managerial Persnnel avice is given in a prfessinal capacity g. Any persn n whse avice, irectins r instructins a irectr r manager is accustme t act, except such avice is given in a prfessinal capacity h. Any cmpany which is: A Hling, Subsiiary r an Assciate cmpany f such cmpany r A Subsiiary f a Hling cmpany t which it is als a Subsiiary i. A Directr, r Key Managerial Persnnel f the hling cmpany r his relative with reference t a cmpany, shall be eeme t be a Relate Party Sec 2 (77) f the Act: With reference t any persn Relate Party means any ne persn, wh is relate t anther, if: they are members f a Hinu Univie Family; they are husban an wife, r One persn is relate t the ther if he r she is relate t anther as uner: Father*, Mther*, Sn*, Sn s wife, Daughter, Daughter s Husban, Brther* an Sister* (*incluing step) Sec 2 (6) f the Act: In relatin t anther cmpany, means a cmpany in which that ther cmpany has a significant influence, but which is nt a subsiiary cmpany f the cmpany having such influence an inclues a jint venture cmpany. Explanatin: Fr the purpses f this clause, significant influence means cntrl f at least 20% f the ttal share capital, r f business ecisins uner an agreement. Sectin 2(6) Sec 2 (46) f the Act: In relatin t ne r mre ther cmpanies, means a cmpany f which such cmpanies are subsiiary cmpanies. Sec 2 (87) f the Act: In relatin t any ther cmpany, that is the Hling cmpany, means a cmpany in which the hling cmpany: (i) (ii) cntrls the cmpsitin f the Bar f Directrs; r exercises r cntrls mre than ne-half f the Ttal Share Capital either at its wn; r tgether with ne r mre f its subsiiary cmpanies: Explanatin: cmpany shall be eeme t be a subsiiary cmpany f the hling cmpany even if the cntrl referre t in sub-clause (i) r sub-clause (ii) is f anther subsiiary cmpany f the hling cmpany; the cmpsitin f a cmpany s Bar f Directrs shall be eeme t be cntrlle by anther cmpany if that ther cmpany, by exercise f sme pwer exercisable by it at its iscretin, can appint r remve all r a majrity f the irectrs; the expressin cmpany inclues anyby crprate; layer in relatin t a hling cmpany means its subsiiary r subsiiaries; Sec 2 (51) f the Act: In relatin t a cmpany means: the Chief Executive Officer (CEO) an /r the Managing Directr (MD) r the Manager; the Cmpany Secretary (CS); the Whle- time Directr (WTD); the Chief Financial Officer (CFO); an Such ther fficer as prescribe uner the Cmpanies Act frm time t time. 5

6 Manager Sectin 2(53) An iniviual wh, subject t the superintenence, cntrl an irectin f the Bar f Directrs, has the management f the whle, r substantially the whle, f the affairs f a cmpany, an inclues a irectr an any ther persn ccupying the psitin f a manager, by whatever name calle, whether uner a cntract f service r nt. Net Wrth Sectin 2(57) The aggregate value f the pai-up share capital an all reserves create ut f the prfits an securities premium accunt, after eucting the aggregate value f the accumulate lsses, eferre expeniture an miscellaneus expeniture nt written ff, as per the auite balance sheet, but es nt inclue reserves create ut f revaluatin f assets, write-back f epreciatin an amalgamatin. Relate Party Uner Clause 49 f the Listing Agreement with Stck Exchanges : Transactin A relate party transactin is a transfer f resurces, services r bligatins between a cmpany an a Relate Party, regarless f whether a price is charge. A "transactin" with a relate party shall be cnstrue t inclue single transactin r a grup f transactins in a cntract. Uner Sectin 188 f the Act Any cntract r arrangement with respect t the fllwing shall be cnsiere as a Relate Party Transactin: sale, purchase r supply f any gs r materials; selling r therwise ispsing f, r buying, prperty f any kin; leasing f prperty f any kin; availing r renering f any services; appintment f any agent fr purchase r sale f gs, materials, services r prperty; appintment f a persn t any ffice r place f prfit in the cmpany, its subsiiary cmpany r assciate cmpany; uner writing the subscriptin f any securities r erivatives theref f the Cmpany Office r place f prfit Arms length transactin Sectin 188 (1) (Explanatin): Office r place f prfit means any ffice r place f prfit: (i) is hel by a irectr, if the irectr hling it receives frm the cmpany anything by way f remuneratin, ver an abve the remuneratin t which he is entitle as irectr, by way f salary, fee, cmmissin, perquisites, any rent-free accmmatin, r therwise; (ii) is hel by an iniviual ther than a irectr r by any firm, private cmpany r ther by crprate, if the iniviual, firm, private cmpany r by crprate hling it receives frm the cmpany anything by way f remuneratin, salary, fee, cmmissin, perquisites, any rent-free accmmatin, r therwise Sectin 188 (1) (Explanatin): The expressin arm s length transactin means a transactin between tw Relate Parties that is cnucte as if they were unrelate, s that there is n cnflict f interest. 6

7 5. MATERIALITY mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm a. Uner Clause 49 f the Listing Agreement with Stck Exchanges A Relate Party Transactin shall be cnsiere Material if the transactin / transactins t be entere int iniviually r taken tgether with previus transactins uring a financial year excee 10% f the annual cnsliate turnver f the Cmpany as per the last auite Financial Statements f the Cmpany. b. Uner the Act S. N Transactin r cntract r arrangements fr 1 Sale, purchases r supply f any gs r materials 2 Selling r therwise ispsing f, r buying prperty f any kin Limits fr the time being in frce * [as per Rule 15 f the Cmpanies (Meetings f Bar an its Pwers) Rules, 2014] 10% f net wrth r Rs. 100 crres, whichever is lwer (Fr the transactin r transactins t be entere in t either iniviually r taken tgether with the previus transactins uring a Financial Year ) 10% f net wrth r Rs. 100 crres, whichever is lwer (Fr the transactin r transactins t be entere in t either iniviually r taken tgether with the previus transactins uring a Financial Year ) 3 Leasing f prperty f any kin 10% f net wrth r 10% f turnver r Rs. 100 crres, whichever is lwer (Fr the transactin r transactins t be entere in t either iniviually r taken tgether with the previus transactins uring a Financial Year ) 4 Availing r renering f any services, irectly r thrugh appintment f agent 10% f net wrth r Rs. 50 crres, whichever is lwer (Fr the transactin r transactins t be entere in t either iniviually r taken tgether with the previus transactins uring a Financial Year ) 5 Such Relate Party's appintment t any ffice r place f prfit in the cmpany, its subsiiary cmpany r assciate cmpany 6 Remuneratin fr unerwriting the subscriptin f any securities r erivatives theref, f the cmpany Where mnthly remuneratin excees Rs.2,50,000 Fr amunt exceeing 1% f Net Wrth f the Cmpany 6. MANNER OF DEALING WITH THE RELATED PARTY TRANSACTIONS tttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt a. Ientificatin f relate parties & transactins Gati shall ientify an upate the list f relate parties as prescribe uner Sectin 2(76) f the Act rea with the Rules frame there uner an Clause 49 f the Listing Agreement. Gati shall ientify the relate party transactins in accrance with Sectin 188 f the Act an Clause 49 f the Listing Agreement. Gati shall als etermining whether the transactin is in the rinary curse f business an at arm s length basis an fr this purpse, the Cmpany seeks external prfessinal pinin, if necessary. 7

8 b. Prceure fr apprval f relate party transactins (i) Auit Cmmittee's Apprval All Relate Party Transactins an any subsequent mificatins theret, shall require the prir apprval f the Auit Cmmittee. Hwever, the Auit Cmmittee may grant mnibus apprval fr Relate Party Transactins prpse t be entere int by the cmpany subject t the fllwing cnitins: The Auit Cmmittee shall lay wn the criteria fr granting the mnibus apprval in line with this Plicy an such apprval shall be applicable in respect f transactins which are repetitive in nature. The Auit Cmmittee shall satisfy itself the nee fr such mnibus apprval an that such apprval is in the interest f the Cmpany; Such mnibus apprval shall specify (i) the name/s f the relate party, nature f the transactin, peri f transactin, maximum amunt f transactin that can be entere int, (ii) the inicative base price / current cntracte price an the frmula fr variatin in the price if any an (iii) such ther cnitins as the Auit Cmmittee may eem fit; Prvie that where the nee fr Relate Party Transactins cannt be freseen an afresai etails are nt available, Auit Cmmittee may grant mnibus apprval fr such transactins subject t their value nt exceeing Rs.1 crre per transactin. The Auit Cmmittee shall review, at least n a quarterly basis, the etails f the Relate Party Transactins entere int by the Cmpany pursuant t each f the mnibus apprval given. Such mnibus apprvals shall be vali fr a peri nt exceeing ne year an shall require fresh apprvals after the expiry f ne year. (ii) Bar f Directrs' apprval All Relate Party Transactins that are: nt in the rinary curse f business, r in the rinary curse f business but nt at arms length r neither in the rinary curse f business nr at arms length shall require the prir apprval f the Bar f Directrs at a Meeting f the Bar. (iii) Sharehlers apprval All the transactins with relate parties exceeing the materiality threshls as lai wn in Clause 5 f the Plicy, are place befre the sharehlers fr apprval. Fr this purpse, all entities falling uner the efinitin f relate parties shall abstain frm vting irrespective f whether the entity is a party t the particular transactin r nt. 8

9 7. RELATED PARTY TRANSACTIONS NOT APPROVED UNDER THIS POLICY YYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY In the event the Cmpany becmes aware f a Relate Party Transactin that has nt been apprve uner this Plicy prir t its cnsummatin, the same shall be reviewe by the Auit Cmmittee / Bar as fllws: The Auit Cmmittee r Bar r Sharehlers, as the case may be, will cnsier all the relevant facts an circumstances regaring the Relate Party Transactin, an evaluate all ptins available t the Cmpany, incluing ratificatin within 3 mnths f the ate f the cntract r arrangement, whether ratificatin shul be allwe an if ratifie whether it wul be beneficial r etrimental t the Cmpany, revisin r terminatin f the Relate Party Transactin incluing the facts an circumstances f failure t btain apprval / reprt such Relate Party Transactin t the Auit Cmmittee r the Bar r Sharehlers uner this Plicy an take such actin as eeme apprpriate. In case, such cntract r arrangement is nt s ratifie, such cntract r arrangement shall be viable at the ptin f the Bar. The Auit Cmmittee shall als examine the facts an circumstances pertaining t the failure f reprting such relate party transactin t the Auit Cmmittee uner this Plicy an failure f the internal cntrl systems, an shall take any such actin it eems apprpriate. Where the Auit Cmmittee r Bar, as the case may be, etermines nt t ratify a Relate Party Transactin that has been cmmence withut apprval, it may irect such aitinal actins incluing, but nt limite t, immeiate cancellatin f such transactin r recvery actin against a Directr r KMP wh ha entere in t such cntract r arrangement in cntraventin f the prvisins f the Act r Clause 49. In any case, where the Auit Cmmittee etermines nt t ratify a relate party transactin that has been cmmence withut apprval, the Auit Cmmittee, as apprpriate, may irect aitinal actins incluing, but nt limite t, iscntinuatin f the transactin r seeking the apprval f the sharehlers, payment f cmpensatin fr the lss suffere by the relate party etc. In cnnectin with any review/apprval f a relate party transactin, the Auit Cmmittee has authrity t mify r waive any prceural requirements f this Plicy. 8. DISCLOSURES SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS Gati shall isclse, in the Bar s reprt, transactins prescribe in Sectin 188(1) f the Act with relate parties, which are nt in rinary curse f business r arm s length basis alng with the justificatin fr entering int such transactin. In aitin t the abve, Gati shall als prvie etails f all relate party transactins meeting the materiality threshl (lai wn in Clause 5 f the Plicy abve) n a quarterly basis t the stck exchanges. 9