HERANBA INDUSTRIES LIMITED POLICY ON MATERIALITY OF RELATED PARTY TRANSACTIONS AND DEALING WITH RELATED PARTY TRANSACTIONS

Transcription

1 1. Title HERANBA INDUSTRIES LIMITED POLICY ON MATERIALITY OF RELATED PARTY TRANSACTIONS AND DEALING WITH RELATED PARTY TRANSACTIONS 1.1 This plicy shall be called the Plicy n materiality f related party transactins and dealing with related party transactins. 2. Cmmencement 2.1 The Plicy shall cme int frce with effect frm the date f listing f the equity shares f Heranba Industries Limited (the Cmpany ) n BSE Limited and Natinal Stck Exchange f India Limited. 3. Objective 3.1 Related party transactins have been ne f the majr areas f fcus fr crprate gvernance refrms being initiated in India. The changes intrduced in the crprate gvernance nrms thrugh Sectin 188 f the Cmpanies Act, 2013, as amended and the rules framed thereunder ( Cmpanies Act ) and Regulatin 23 f the Securities and Exchange Bard f India (Listing Obligatin and Disclsure Requirements) Regulatins, 2015, as amended ( SEBI Listing Regulatins ) require the cmpanies t have enhanced transparency and due prcess fr apprval f the related party transactins. Pursuant theret, Sectin 188 f the Cmpanies Act and Regulatin 23 f the SEBI Listing Regulatins require the Cmpany t frmulate a plicy n materiality f related party transactins and als n dealing with related party transactins. 3.2 Accrdingly, the bard f directrs ( Bard ) f the Cmpany has adpted the fllwing plicy with regard t related party transactins. The Audit Cmmittee f the Cmpany will review this plicy n an annual basis and prpse any mdificatins t the Bard fr apprval. 4. Definitins i. Arm's length transactin means a transactin between tw related parties that is cnducted as if they were unrelated, s that there is n cnflict f interest. ii. iii. iv. Audit Cmmittee means the audit cmmittee f the bard f directrs f the Cmpany. Bard means the Bard f directrs f the Cmpany. Cmpany r Heranba means Heranba Industries Limited. v. Key Managerial Persnnel r KMPs means Key Managerial Persnnel as defined under the Act and includes: (i) (ii) (iii) Managing Directr, r Chief Executive Officer r Manager; the Whle Time Directr; Cmpany Secretary; and

2 (iv) Chief Financial Officer. vi. vii. Material Related Party Transactin in relatin t the Cmpany means a related party transactin which individually r taken tgether with previus transactins with a related party during a financial year, exceeds ten per cent f the annual cnslidated turnver f the Cmpany as per the last audited financial statements f the Cmpany. Ordinary Curse f Business with reference t a transactin with a related party means a transactin which is: Carried ut in the nrmal curse f business envisaged in accrdance with the Memrandum f Assciatin f the Cmpany as amended frm time t time; histrical practice with a pattern f frequency; cmmn cmmercial practice; r meets any ther parameters/criteria as decided by the Bard/Audit Cmmittee, frm time t time. (viii) (ix) (x) Plicy means this plicy, as amended frm time t time. Related Party in relatin t the Cmpany means a party related with the Cmpany in any f the ways as laid dwn in sectin 2(76) f the Cmpanies Act r under applicable accunting standards. Related Party Transactin means a transfer f resurces, services r bligatins between a Cmpany and a related party, regardless f whether a price is charged and a transactin with a related party shall be cnstrued t include a single transactin r a grup f transactins in a cntract, and includes transactins as defined as a related party transactin under the relevant prvisins f the Cmpanies Act r the SEBI Listing Regulatins r any ther related law, regulatin, standard. 5. Interpretatin 5.1 Any wrds used in this Plicy but nt defined herein shall have the same meaning prescribed t it in the Cmpanies Act, the Securities and Exchange Bard f India Act, 1992, as amended, r rules and regulatins made thereunder including the SEBI Listing Regulatins, the applicable accunting standards r any ther relevant legislatin/law applicable t the Cmpany. 5.2 The reference t the masculine gender in the Plicy shall be deemed t include a reference t feminine gender. 5.3 In case f any dispute r difference upn the meaning/interpretatin f any wrd r prvisin in this plicy, the same shall be referred t the Audit Cmmittee and the decisin f the Audit Cmmittee shall be final. In interpreting such term/prvisin, the Audit Cmmittee may seek the help f any f the fficers f the Cmpany r an external expert as it deems fit.

3 6. Prcedure 6.1 Disclsure by Directrs Every directr shall at the beginning f the financial year prvide infrmatin by way f written ntice t the Cmpany regarding his cncern r interest in the entity with specific cncern t parties which may be cnsidered as Related Party with respect t the Cmpany and shall als prvide the list f relatives which are regarded as Related Party as per this Plicy Directrs are als required t prvide the infrmatin regarding their engagement with ther entity during the financial year which may be regarded as related party accrding t this Plicy. 6.2 Identificatin f Transactin with Related Parties Each Directr and Key Managerial Persnnel is respnsible fr prviding ntice t the Cmpany r Audit Cmmittee f any ptential Related Party Transactin invlving him r her r his r her relative, including any additinal infrmatin abut the transactin that the Bard/Audit Cmmittee may reasnably request. Audit Cmmittee will determine whether a transactin des cnstitute a Related Party Transactin requiring cmpliance with this Plicy Each Directr and Key Managerial Persnnel shall make an annual declaratin t the Cmpany and this declaratin shall be placed befre the Audit Cmmittee and the Bard f Directrs at their first meeting held at the succeeding financial year Any change in the list f relatives shall be intimated by the Directrs and KMPs by way f a fresh declaratin t the Cmpany. 7. Apprval f Related Party Transactins 7.1 Audit Cmmittee Related party transactins will be referred t the next regularly scheduled meeting f Audit Cmmittee fr review and apprval. Any member f the Cmmittee r the Directrs f the Bard wh has ptential interest in any Related Party Transactin will in terms f Chapter XII Rule 15(2) shall nt be present at the meeting during the discussins n the subject matter and shall recuse himself r herself and abstain frm discussin and vting n the apprval f the Related Party Transactin All the transactins which are identified as Related Party Transactins shuld be preapprved by the Audit Cmmittee befre entering int such transactin The Audit Cmmittee shall cnsider the fllwing factrs while deliberating the related party transactins fr its apprval: i. Name f party and details explaining nature f relatinship; ii. Duratin f the cntract and particulars f the cntract and arrangement; iii. Nature f transactin and material terms theref including the value, if any;

4 iv. Manner f determining the pricing t ascertain whether the same is n arm s length; v. Business ratinale fr entering int such transactin; and vi. Any ther infrmatin relevant r imprtant fr the Bard t take a decisin n the prpsed transactin In determining whether t apprve a Related Party Transactin, the Cmmittee will cnsider the fllwing factrs, amng thers, t the extent relevant t the Related Party Transactin: i. Whether the terms f the Related Party Transactin are fair and n arm s length basis t the Cmpany and wuld apply n the same basis if the transactin did nt invlve a Related Party; ii. Whether there are any cmpelling business reasns / ratinale fr the Cmpany t enter int the Related Party Transactin and the nature f alternative transactins, if any; iii. Whether the Related Party Transactin wuld affect the independence f an independent Directr; iv. Whether the prpsed transactin includes any ptential reputatinal risk issues that may arise as a result f r in cnnectin with the prpsed transactin; v. Whether the Cmpany was ntified abut the Related Party Transactin befre its cmmencement and if nt, why pre-apprval was nt sught and whether subsequent ratificatin is allwed and wuld be detrimental t the Cmpany; and vi. Whether the Related Party Transactin wuld present an imprper cnflict f interest fr any Directr r Key Managerial Persnnel f the Cmpany, taking int accunt the size f the transactin, the verall financial psitin f the Directr, Executive Officer r ther Related Party, the direct r indirect nature f the Directr s, Key Managerial Persnnel s r ther Related Party s interest in the transactin and the nging nature f any prpsed relatinship and any ther factrs the Bard/Cmmittee deems relevant The Audit Cmmittee may grant mnibus apprval fr Related Party Transactins prpsed t be entered int by the Cmpany subject t the fllwing cnditins: i. The Audit Cmmittee shall lay dwn the criteria fr granting the mnibus apprval in line with the Plicy n Related Party Transactins f the Cmpany and such apprval shall be applicable in respect f transactins which are repetitive in nature. ii. iii. The Audit Cmmittee shall satisfy itself the need fr such mnibus apprval and that such apprval is in the interest f the Cmpany; Such mnibus apprval shall specify (i) the name/s f the related party, nature f transactin, perid f transactin, maximum amunt f transactin that can be entered int, (ii) the indicative base price / current cntracted price and the frmula fr variatin in the price if any and (iii) such ther cnditins as the Audit Cmmittee may deem fit;

5 Prvided that where the need fr Related Party Transactin cannt be freseen and afresaid details are nt available, Audit Cmmittee may grant mnibus apprval fr such transactins subject t their value nt exceeding Rs.1 crre per transactin. iv. Audit Cmmittee shall review, at least n a quarterly basis, the details f Related Party Transactins entered int by the Cmpany pursuant t each f the mnibus apprval given. v. Such mnibus apprvals shall be valid fr a perid nt exceeding ne year and shall require fresh apprvals after the expiry f ne year. 7.2 Bard f Directrs In case f Related Party Transactin which is nt in the rdinary curse f business r nt at arm's length transactin, whether r nt it is a material Related Party Transactin, prir apprval f the Bard thrugh a reslutin passed at the meeting f the Bard shall be necessary Where any directr is interested in any cntract r arrangement with a Related Party, such directr shall nt be present at the meeting during discussins n the subject matter f the reslutin relating t such cntract r arrangement The plicy shall be reviewed by the Bard n an yearly basis. 7.3 Sharehlder apprval All material related party transactins shall require prir apprval f the sharehlders thrugh reslutin and the Related Parties shall abstain frm vting n such reslutins whether the entity is a Related Party t the particular transactin r nt If a related party transactins is nt in the rdinary curse f business, r nt at arm s length price and exceeds certain threshlds as prescribed under Sectin 188 f the Cmpanies Act, it shall require sharehlders apprval by a reslutin. The Related Parties shall abstain frm vting as sharehlders in case f Related Party Transactins which require the apprval f sharehlders Hwever, the sharehlders apprval is nt required fr the transactins entered int between the Cmpany and its whlly wned subsidiaries whse accunts are cnslidated with the Cmpany and placed befre the sharehlders at the general meeting fr apprval. 7.4 Prcess fr Dealing with Related Party Transactins A list f all the related parties in relatin t the Cmpany received frm the Bard shall be updated frm time t time Basis the abve mentined list f related parties, every department shall, prir t entering in t any cntract r arrangement with a related party, ascertain whether the prpsed cntract r arrangement satisfies the apprval mechanism prescribed under this Plicy The cntract/arrangement shall nt be entered in t withut the necessary apprval frm the Audit Cmmittee/Bard/sharehlders, as the case may be. Cmpliance t

6 this cnditin will strictly be adhered t by the cncerned department prpsing the underlying cntract r arrangement. 8. Reprting f Related Party Transactins 8.1 Every cntract r arrangement, which is required t be apprved by thebard/sharehlders under this Plicy, shall be referred t in the Bard s reprt t thesharehlders alng with the justificatin fr entering int such cntract r arrangement. 8.2 The details f material transactins with related parties will be included in the crprate gvernance reprts which are required t be submitted t the stck exchanges n a quarterly basis. 8.3 The Cmpany shall disclse the plicy n dealing with Related Party Transactins n its website and a web link theret shall be prvided in the Annual Reprt f the Cmpany. 9. Amendments 9.1 Any change in the Plicy shall be apprved by the Bard f Directrs f the Cmpany. The Bard f Directrs shall have the right t withdraw and/r amend any part f this Plicy r the entire Plicy, at any time, as it deems fit, r frm time t time, and the decisin f the Bard in this respect shall be final and binding. Any subsequent amendment/mdificatin in the Act r the Listing Regulatins and/r any ther laws in this regard shall autmatically apply t this Plicy. 10. Cmmunicatin f this Plicy 10.1 This Plicy shall be psted n the website f the Cmpany.