POLICY ON RELATED PARTY TRANSACTIONS/ DISCLOSURES

Transcription

1 POLICY ON RELATED PARTY TRANSACTIONS/ DISCLOSURES BLUE DART EXPRESS LIMITED 1

2 TABLE OF CONTENTS I. Preamble...3 II. III. Objective...3 Definitions...3 IV. Related Party Transactions...5 V. Disclosure of interest by director/kmps...8 VI. Loan to directors, etc...9 VII. Loan and investment by the Company...10 VIII. Register of loans guarantee, security and acquisition made by the Company...10 IX. Register of contracts or arrangements in which directors are interested...12 X. Scope Limitation...12 XI. Dissemination of Policy...13 XII. Violation of the Policy...13 Annexure Annexure Annexure

3 I. Preamble BLUE DART POLICY ON RELATED PARTY DISCLOSURES As per the provisions of Companies Act, 2013 and Listing Agreement, the Company is required to formulate the policy on materiality of related party transactions and also on dealing with Related Party Transactions and the said policy is required to be disclosed on the Company s website and in the Annual Report. The Board of Directors (the Board ) of Blue Dart Express Ltd., (the Company ) has adopted the policy on recommendation of the Audit Committee and the said Policy includes the materiality threshold and the manner of dealing with Related Party Transactions ( Policy ) in compliance with the requirements of Section 188 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges in India. Amendments to the Policy, from time to time, shall be considered by the Board based on recommendations of the Audit Committee. This Policy applies to transactions between the Company and one or more of its Related Parties. It provides a framework for governance and reporting of Related Party Transactions including material transactions. II. Objective In its endeavour to ensure due and proper compliance with the applicable provisions and to ensure that proper procedure is defined and followed for approval/ ratification and reporting of transactions as applicable, between the Company and any of its Related Parties, this policy has been adopted by the Company s Board of Directors. The provisions of this policy are designed to govern the transparency of approval process and disclosures requirements to ensure fairness in the conduct of a related party transactions, in terms of the applicable laws. The objectives of this Policy are : 1. To establish requirements for disclosure of : (a) related party transactions and (b) related party relationships 2. Disclosures and other requirements : III. Definitions : Words and expressions used hereunder have the meaning as given below : 1. Act means Companies Act, 2013 and any rules made thereunder. 2. Audit Committee or Committee means the Committee of the Board constituted from time to time under the provisions of Clause 49 of the Listing Agreement and Section 177 of the Companies Act, Board means Board of Directors of the Company. 4. Government Company means a Government Company as defined in Section 2(45) of the Act 3

4 5. Key Managerial Personnel (KMPs) : Key Managerial Personnel in respect of a Company means and includes : i. Managing Director or MD ii. Whole Time Director or WTD iii. Chief Executive Officer or CEO iv. Chief Financial Officer or CFO v. Company Secretary or CS 6. Material Related Party Transaction means a Related Party Transaction which individually or taken together with previous transactions during the financial year, exceeds ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company or such limits as may be prescribed either in the Companies Act, 2013 or the Listing Agreement, whichever is stricter, from time to time. 7. Related Party A. As per Companies Act, 2013 : Related Party means any person whether individual, firm or body corporate who is interested in any contracts and arrangements entered into by the Company and includes : i. Director ii. Relative of Director iii. Key Managerial Personnel (KMP) iv. Relative of KMP v. Any firm, in which a director, manager or his relative is a partner vi. Any Private Company in which any Director/Manager or his relative is a Director/Manager or Member vii. Any Public Company in which a Director is a Director and holds together with his relatives, more than 2% of the paid up capital Provided that nothing contained in point No. (vi) or (vii) shall apply to advice or instructions given in a Professional Capacity viii. Any Body Corporate whose Board of Directors, Managing Director or Manager is accustomed to act with the advice or instructions of a manager ix. Any person on whose advice, directions or instructions a Director is accustomed to Act x. Subsidiary Companies xi. Associate Companies xii. Subsidiary of a holding company to which it is also a subsidiary xiii. Holding Company xiv. Director of Holding Company excluding Independent Directors xv. Relative of Director of the Holding Company xvi. KMP of the Holding Company xvii. Relative of KMP of the Holding Company B. As per Clause 49 of Listing Agreement an entity shall be considered as related to the company if: (i) such entity is a related party under Section 2(76) of the Companies Act, 2013; or (ii) Such entity is a related party under the applicable accounting standards 4

5 a. Relative means and includes : i. Members of HUF ii. Spouse iii. Father (including Step Father) iv. Mother (incluing Step Mother) v. Son (including Step Son) vi. Daughter vii. Son s Wife viii. Daughter s Husband ix. Brother (including step Brother) x. Sister (including Step Sister) IV. Related Party Transactions a. Standing Pre-Approval / Omnibus Approval by the Committee : As per Companies Act, 2013 and Clause 49 of Listing Agreement, all Related Party Transactions will require prior Audit Committee approval. However, Clause 49 (VII) D of SEBI Listing Agreement provides that the Audit Committee may grant omnibus approval for Related Party Transactions proposed to be entered into by the company subject to the following conditions: i. The Audit Committee shall lay down the criteria for granting the omnibus approval in line with the policy on Related Party Transactions of the company and such approval shall be applicable in respect of transactions which are repetitive in nature. In case of frequent/ regular/ repetitive transactions which are in the normal course of business of the Company, the Committee may grant standing pre-approval/ omnibus approval. ii. The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of the company. iii. Such omnibus approval shall specify (i) the name/s of the related parties, nature of transaction, period of transaction, maximum amount of transaction that can be entered into, (ii) the indicative base price / current contracted price and the formula for variation in the price if any and (iii) such other conditions as the Audit Committee may deem fit. Such transactions will be deemed to be pre-approved and may not require any further approval of the Audit Committee for each specific transaction unless the price, value or material terms of the contract or arrangement have been varied/ amended. Any proposed variations/ amendments to these factors shall require a prior approval of the Committee. Provided that where the need for Related Party Transaction 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 crore per transaction. iv. Audit Committee shall review, at least on a quarterly basis, the details of Related Party Transactions entered into by the company pursuant to each of the omnibus approvals given. v. Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approval after expiry of one year. 5

6 Provided that above requirement of clause 49 (VII) (D) relating to approval of the Audit Committee shall not be applicable to below transactions: entered into between two government companies; transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval As per the Companies Act, 2013, in case, if the related party transactions are not at arm s length or not in ordinary course of business, they will require Board and/or shareholders approval as per the procedure given below: The Company is required to obtain prior approval of the Board and Shareholders in a meeting before entering into any contract or arrangement with a related party in respect of the transactions as given in the table below: Sr. No. CATEGORY OF TRANSACTIONS MONETARY THRESHOLD I Sale, purchase or supply of any goods or materials > 10% of Annual Turnover or Rs.100 crore, whichever is lower 2 selling or otherwise disposing of, or buying, property of any kind; > 10% of Net Worth or Rs.100 crore, whichever is lower 3 4 leasing of property of any kind; availing or rendering of any services; > 10% of Net Worth or 10% of Annual Turnover or Rs.100 crores, whichever is lower 10% of Annual Turnover or Rs.50 crores, whichever is lower 5 appointment of any agent for purchase or sale of goods, materials, services or property 10% of Net Worth 6 such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company (refer annexure for definition) >2.5 Lakh per month 7 underwriting the subscription of any securities or derivatives thereof, of the company >1% of Net Worth 6

7 Notes: a. The Turnover or Net Worth referred above shall be on the basis of the audited financial statement of the preceding financial year b. The limits specified in Point No. 1 to 4 of the table shall apply for the transaction/transactions to be entered into either individually or taken together with the previous transactions during the financial year c. Transactions arising out of Compromises, Arrangements and Amalgamations dealt with under specific provisions of the Companies Act, 1956/Companies Act, 2013, will not attract the requirements of section 188 of the Companies Act, 2013 Further, As per Clause 49 of the Listing Agreement, all material related party transactions will require shareholders approval by special resolution even if they are at arm s length and in ordinary course of business. Related parties shall abstain from voting on such resolutions. Provided that the above provision of special resolution for material related party transactions shall not apply to transactions: (i) (ii) entered into between two government companies; transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval Ordinary course of business is nowhere defined in the Act or rules. However, there are some judicial precedents available which explain the term. For example, In Peddi Viraya v/s Doppalapudi Subba Rao And the Andhra Pradesh High Court said that ordinary course of business means there should be a series of transactions as distinguished from one transaction. A stray transaction may not be said to constitute an ordinary course of business. Arms Length transaction means transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest. As per Listing Agreement, a transaction with a related party shall be considered material if the transaction/ transactions to be entered into individually or taken together with previous transactions during a financial year, exceeds 10% (ten percent) of the annual consolidated turnover as per the last audited financial statements of the company, whichever is higher Thus, as per Companies Act, 2013 : - All Related Party Transactions will require prior Audit Committee approval. - Transactions which are not in ordinary course of business and / or not at arms s length, will require approval of the Board of Directors and Shareholders. As per Listing Agreement : - All Related Party Transactions will require prior Audit Committee approval. - All Material Transactions will require approval of Board of Directors and Shareholders. Approval by Circular Resolution of the Committee : In the event, if the Company Management determines that it is impractical or undesirable to wait until a meeting of the Committee to enter into a Related Party Transaction, such transaction may be approved by the Committee by way of circular resolution in accordance with this Policy and statutory provisions for the time being in force. Any such approval must be ratified by the Committee at its next scheduled meeting. 7

8 V. Disclosure of interest by Director / KMPs a. Every director and KMPs shall at the first meeting of the Board of the Company in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures made, then at the first Board meeting held after such change, disclose his concern or interest in any company or companies or bodies corporate, firms or other association of individuals, by giving a notice in writing in Form MBP 1, a format of which has been annexed hereto as Annexure-1. b. It shall be the duty of the director/ KMP giving notice of interest to cause it to be disclosed at the meeting held immediately after the date of the notice. c. All notices shall be kept at the registered office of the Company and such notices shall be preserved for a period of eight years from the end of the financial year to which it relates and shall be kept in the custody of the company secretary of the Company or any other person authorized by the Board for the purpose. Every director/kmp who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into with any of the related parties will be considered as interested for the proposed contract/arrangement and shall not have right to vote on the resolution or participate during the discussion on the said agenda item. d. In the event that any director/ KMP who is not so concerned or interested at the time of entering into such contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the first meeting of the Board held after he becomes so concerned or interested. e. In the event of the contract entered into without the prior approval of Board or shareholders due to extreme necessity the same shall be ratified by the Board, and/or shareholders, as required within 3 months of the entering into the contract. If not, the contract/arrangement shall be voidable at the option of the Board. The Company shall maintain an updated database of information pertaining to Related Parties reflecting details of 1. All Directors and Key Managerial Personnel; 2. All individuals, partnership firms, companies and other persons as declared and updated by Directors and Key Managerial Personnel; 3. Company s holding company, subsidiary companies and associate companies; 4. Subsidiaries of holding company; 5. Director or Key Managerial Personnel of the holding Company or their Relatives; 6. Any other entity which is a Related Party as defined under Section 2(76) of the Companies Act, 2013 read with Clause 49 of the Listing Agreement or the relevant Accounting Standard. The database shall be updated whenever necessary and shall be reviewed at least once a year jointly by the Company Secretary and Chief Financial Officer. The Functional / Business Heads/Chief Financial Officer/ Company Secretary shall have access to the updated database. 8

9 Every Director, KMPs, Functional/ Business Heads/ Chief Financial Officer will be responsible for providing prior Notice to the Company Secretary of any potential Related Party Transaction. They will also be responsible for providing additional information about the transaction that the Board / Committee may request, for being placed before the Committee and the Board. The Company Secretary in consultation with the Chief Financial Officer may refer any potential related party transaction to any external legal/ transfer pricing expert and the outcome or opinion of such exercise shall be brought to the notice of the Audit Committee. Based on this notice, the Company Secretary will take it up for necessary approvals under this Policy. VI. Loan to directors, etc. a. Save as otherwise provided in Act, no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person. However, the above shall not apply to the giving of any loan to a managing or whole-time director as a part of the conditions of service extended by the company to all its employees; or pursuant to any scheme approved by the members by a special resolution; or Any Loan given by the Company to its Wholly Owned Subsidiaries provided such loan is utilised by the subsidiary company for its principle business activities Any Guarantee or Security given to its subsidiary Company in respect of loans taken by the subsidiary from Banks or Financial Institutions provided the funds borrowed are used by the subsidiary for its principal business activities. Loans or guarantees or securities given by the company which in the ordinary course of its business provides such loans or guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the bank rate declared by the Reserve Bank of India ( RBI ) b. The expression to any other person in whom director is interested means any director of the lending company, or of a company which is its holding company or any partner or relative of any such director; any firm in which any such director or relative is a partner; any private company of which any such director is a director or member; any body corporate at a general meeting of which not less than twenty five per cent. of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together; or 9

10 any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company. VII. Loan and investment by the Company a. Unless approved by the Shareholders by way of a special resolution, the Company shall not make any loan to any person or other body corporate, give any guarantee or provide any security in connection with a loan to any other body corporate or person and acquire by subscription, purchase or otherwise, the securities of other body corporate exceeding 60% of its paid up share capital, free reserves and securities premium account or 100% of its free reserves and securities premium account, whichever is more. b. The requirement to pass a special resolution shall not apply where a loan or guarantee is given or where a security is provided by a company to its wholly owned subsidiary company or a joint venture company, or acquisition is made by a holding company, by way of subscription, purchase or otherwise of, the securities of its wholly owned subsidiary company. Provided that the Company shall disclose the details of such loans or guarantee or security or acquisition in the financial statement. c. A resolution passed at a general meeting to give any loan or guarantee or investment or providing any security or the acquisition of shares shall specify the total amount up to which the Board is authorised to give such loan or guarantee, to provide such security or make such acquisition. Provided that the Company shall disclose to the members in the financial statement the full particulars of such transaction. d. No investment shall be made or loan or guarantee or security given by the company unless the resolution sanctioning it is passed at a meeting of the Board with the consent of all the Directors present at the meeting and the prior approval of the public financial institution concerned where any term loan is subsisting, is obtained. Provided that prior approval of a public financial institution shall not be required where the aggregate of the loans and investments so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate, along with the investments, loans, guarantee or security proposed to be made or given does not exceed the limit as specified above and there is no default in repayment of loan instalments or payment of interest thereon as per the terms and conditions of such loan to the public financial institution. e. No loan shall be given under this section at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan VIII. Register of loans guarantee, security and acquisition made by the Company a. In the event that the Company gives any loan or guarantee or provides security or makes an acquisition of securities it shall maintain a register in Form MBP 2 (either manual or electronic), a format of which has been annexed hereto as Annexure-2, and enter therein separately, the particulars of loans and guarantees given, securities provided and acquisitions made. 10

11 b. The entries in the register shall be made chronologically in respect of each such transaction within seven days of making such loan or giving guarantee or providing security or making acquisition. c. The register shall be kept at the registered office of the Company and the register shall be preserved permanently and shall be kept in the custody of the company secretary of the Company or any other person authorised by the Board for the purpose. d. The entries in the register shall be authenticated by the company secretary of the Company or by any other person authorised by the Board for the purpose. e. The extracts from the register may be furnished to any member of the Company on payment of such fee as may be prescribed in the Articles of Association of the Company which shall not exceed ten rupees for each page. The agenda of the Audit Committee meeting and Board meeting at which the resolution is proposed to be moved shall disclose- the name of the related party and nature of relationship; the nature, duration of the contract and particulars of the contract or arrangement; the material terms of the contract or arrangement including the value, if any; any advance paid or received for the contract or arrangement, if any; the manner of determining the pricing and other commercial terms, both included as part of contract and not considered as part of the contract; whether all factors relevant to the contract have been considered, if not, the details of factors not considered with the rationale for not considering those factors; and any other information relevant or important for the Board to take a decision on the proposed transaction. b. The explanatory statement to be annexed to the notice of a general meeting shall contain the following particulars namely:- name of the related party; name of the director or key managerial personnel who is related, if any; nature of relationship; nature, material terms, monetary value and particulars of the contract or arrangement; and any other information relevant or important for the members to take a decision on the proposed resolution. 11

12 IX. Register of contracts or arrangements in which directors are interested a. Company shall maintain one or more registers in Form MBP 4 (either manual or electronic) a format of which has been annexed hereto as Annexure-3 and shall enter therein the particulars of- company or companies or bodies corporate, firms or other association of individuals, in which any director has any concern or interest, provided that the particulars of the company or companies or bodies corporate in which a director himself together with any other director holds two per cent or less of the paid-up share capital would not be required to be entered in the register; contracts or arrangements with a body corporate or firm or other entity, in which any director is, directly or indirectly, concerned or interested; and contracts or arrangements with a related party with respect to transactions as mentioned above. It is to noted that as per the Companies Act, 2013, only related parties which are interested in the particular contract/arrangement to abstain from voting on the resolution for the same. However, as per Clause 49 of SEBI all entities falling under the definition of related parties shall abstain from voting irrespective of whether the entity is a party to the particular transaction or not b. The entries in the register shall be made at once, whenever there is a cause to make entry, in chronological order and shall be authenticated by the company secretary of the Company or by any other person authorised by the Board for the purpose. c. The register shall be kept at the registered office of the Company and the register shall be preserved permanently and shall be kept in the custody of the company secretary of the Company or any other person authorised by the Board for the purpose. d. The Company shall provide extracts from such register to a member of the Company on his request, within seven days from the date on which such request is made upon the payment of such fee as may be specified in the articles of the Company but not exceeding ten rupees per page. X. Scope Limitation In the event of any conflict between the provisions of this Policy and Listing Agreement/ Companies Act, 2013 or any other statutory enactments, rules, the provisions of such Listing Agreement/ Companies Act, 2013 or statutory enactments, rules shall prevail over this Policy. 12

13 XI. Dissemination of Policy Either this policy or the important provisions of this policy shall be disseminated to all functional and operational employees and other concerned persons of the Company and shall be hosted on the website of the Company and web link thereto shall be provided in the Annual Report of the Company. XII. Violation of the Policy : In the event, if the Company becomes aware of a Related Party Transaction which has not been approved under this Policy prior to its consummation, the same shall be reviewed by the Audit Committee/ Board as follows : a. The Audit Committee or Board or Shareholders, as the case may be, will consider all the relevant facts and circumstances regarding the Related Party Transaction, and evaluate all options available to the company, including ratification within 3 months of the date of the contract or arrangement, whether ratification should be allowed and if ratified whether it would be beneficial or detrimental to the Company, revision or termination of the Related Party Transaction including the facts and circumstances of failure to obtain approval/ report such Related Party Transaction to the Audit Committee or the Board or Shareholders under this Policy and take such action as deemed appropriate. In case, such contract or arrangement is not so ratified, such contract or arrangement shall be voidable at the option of the Board. b. It shall be open to the Company to proceed against a Director or any other employee who had entered into such a contract or arrangement in contravention of the provisions of this Policy for recovery of any loss sustained by it as a result of such contract or arrangement. c. Where the Audit Committee or Board, as the case may be, determines not to ratify a Related Party Transaction which has been commenced without approval, it may direct such additional actions including, but not limited to, immediate cancellation of such transaction or recovery action against a Director or KMP who had entered into such contract or arrangement in contravention of the provisions of the Act or Clause 49. d. If such contract or arrangement is with a `related party with reference to any Director, or is authorised by any other Director, the Directors concerned shall indemnify the Company against any loss incurred by it. 13

14 Annexure-1 Form MBP-1 Notice of interest by director [Pursuant to section 184 (1) and rule 9(1)] To The Board of Directors..Limited Dear Sir(s) I,..., son/daughter/spouse of., resident of.., being a director in the company hereby give notice of my interest or concern in the following company or companies, bodies corporate, firms or other association of individuals:- Sl No. Names of the Companies/bodies corporate/ firms/ association of individuals Nature of interest or concern / Change in interest or concern Shareholding Date on which interest or concern arose/changed Signature: MD/Director/Secretary/Whole time Director Place: Date: 14

15 Annexure-2 Form MBP - 2 Register of loans, guarantee, security and acquisition made by the company [Pursuant to section186 (9) & rule 12(1)] Nature of transaction (whether loan/ guarantee/ security/acquisition) Date of making loan/acquisition / giving guarantee/ providing security Name and address of the person or body corporate to whom it is made or given or whose securities have been acquired (Listed/Unlisted entities) Amount of loan/ security/acquisition /guarantee Time period for which it is made/ given (1) (2) (3) (4) (5) Purpose of loan/acquisition /guarantee/ security % of loan/acquisition /exposure on guarantee/ security provided to the paid up capital, free reserves and securities premium account and % of free reserves and securities premium Date of passing Board resolution Date of passing special resolution, if required Rate of interest For loans (6) (7) (8) (9) (10) (11) Date of maturity Number and kind of securities Nominal value and paid up value Cost of acquisition (in case of securities how the purchased price was arrived at) For acquisitions Date of selling of investment Selling Price (how the price was arrived at) Signatures and Remarks (12) (13) (14) (15) (16) (17) Signature: MD/Director/Secretary/Whole time Director Place: Date: 15

16 Annexure-3 Form MBP 4 Register of contracts with related party and contracts and Bodies etc. in which directors are interested [Pursuant to section 189(1) and rule 16(1)] A. Contracts or agreements with any related party under section 188 or in which any director is concerned or interested under sub- section (2) of section 184. Date of contract / arrangement Name of the party with which contract is entered into Name of the interested director Relation with director/ company/ Nature of concern or interest Principal terms and conditions Whether the transaction is at arm s length basis (1) (2) (3) (4) (5) (6) Date of approval at the meeting of the Board No. of directors present in the meeting Details of voting on such resolution Directors voting in favour Directors voting against Directors remaining neutral Date of the next meeting at which register was placed for signature (7) (8) (9) (10) (11) (12) Reference of specific items (a) to (g) under sub- section (1) of section 188 Amount of contract or Arrangement Date of shareholders approval if any Signature Remarks, if any (13) (14) (15) (16) (17) 16

17 B. Name of the bodies corporate, firms or other association of individuals as mentioned under sub- section (1) of section 184, in which any director is having any concern or interest. Names of the Companies /bodies corporate/ firms/ association of individuals Name of the interested director Nature of interest or concern / Change in interest or concern Shareholding (if any) Date on which interest or concern arose / changed Signature: MD/Director/Secretary/Whole time Director Place: Date: 17