- TITLE
This Policy shall be called “RPT Policy on materiality and dealing with related party transactions."
- OBJECTIVE
RPT have been one of the major areas of focus for the corporate governance reforms being initiated by Indian Legislature.
The changes introduced in Corporate Governance norms through the Companies Act, 2013 and revamped SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 (LODR) required the companies to have enhanced transparency and due process for approval of the related party transactions.
One of such requirements is that companies are required to formulate a policy on materiality of related party transactions.
- DEFINATIONS
I. 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.
II. Audit Committee: means the audit committee of the Board of Directors of SKN.
III. Board: means the Board of Directors of SKN.
IV. Company: means SKN.
V. Material Related Party Transactions: in relation to the company means a RPT which individually or taken together with previous transactions with a related Party during the financial year, 10 percent of the annual consolidated turnover of the Companyas per the last audited financial statements of the company, or any other limit as may be prescribed from time to time as per LODRand Section 188 of the Companies Act, 2013 and related rules thereon.
VI. Policy: means this policy, as amended from time to time.
VII. Related Party: in relation to the company means a related party with the company in any of the ways as are laid down in Section 2(76) of the Companies Act, 2013 and LODR Regulations.
VIII. Related Party Transaction: in relation to the Company means a transaction which is:
a. A transfer of resources, services or obligations between the company and a related party regardless of whether a price is charged.
b. A contract or arrangement with a related party with respect to-
i. Sale, purchase or supply of any goods or materials;
ii. Selling or otherwise disposing off, or buying, property of any kind;
iii. Leasing of property of any kind;
iv. Availing or rendering of any services;
v. Appointment of any agent for purchase or sale of goods, materials, services or property;
vi. Such related party’s appointment to any office or place of profit in the company, its subsidiary or associate company;
vii. Underwriting the subscription of any securities or derivatives thereof, of the company;
c. Defined as a related party transaction under the relevant provisions of the Companies Act, 2013 or under LODR Regulations or any other related law, regulation, standard etc.
- APPLICABILITY
This policy shall be applicable to all the related party transactions entered into by the Company with the related party as defined in the policy.
- APPROVAL OF RELATED PARTY TRANSACTIONS
A. All related party transactions shall require prior approval of the audit committee. The approval of the audit committee can be granted by way of circular resolution. However, the Audit Committee may grant omnibus approval from related party transactions proposed to be entered into by the company subject to the following conditions:
i. The audit committee shall laydown the criteria for granting the omnibus approval in line with the policy on RPT of the company and such approval shall be applicable in respect of transactions which are repetitive in nature.
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 satisfy-
-> 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,
-> Such other conditions as the Audit Committee may deem fit;
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 Crore per transaction.
iv. Audit Committee shall review, at least on a quarterly basis, the details of RPTs entered by the Company pursuant to each of the omnibus approval given.
v. Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after expiry of one year.
B. All non-material RPT shall require prior approval of shareholders through Ordinary Resolution as per Companies Act, 2013, whereas all material related party transaction shall require approval of shareholders through Special Resolution as per LODR Regulations. However, no approval of audit committee and shareholders would be required for the transactions entered between a holding company and its wholly owned subsidiary company whose accounts are consolidated with such holding company and placed before the shareholders at general meeting for approval.
C. Prior approval of audit committee, board and shareholders by way of passing Ordinary Resolution in their general meeting, would be required in following situations-
-> In case of non-material related party transaction which is not in ordinary course of business or;
-> In case of non-material related party transaction which is in the ordinary course of business but is not an arm’s length transaction.
D. Prior approval of Audit Committee, prior approval of Board and approval of Shareholders (may or may not be prior) by way of passing Special resolution in their general meeting, would be required in following situations.
-> In case of material related party transaction which is not in ordinary course of business or;
-> In case of material related party transaction which is in the ordinary course of business but is not an arm’s length transaction.
E. In accordance with the provisions of Clause 18 of LODR Regulations read with Section 188 of the Companies Act, 2013, prior approval of only audit committee would be required for all related party transactions which is not a material related party transaction and which is in ordinary course of business and an arm’s length transaction.
F. Where any director is interested in any contract or arrangement with related party, such director shall not be present in the meeting during discussions on the subject matter of the resolution relating to such contract or arrangement.
The related party shall abstain from voting as shareholders in case of related party transactions which require the approval of shareholders.
- PROCESS FOR DEALING WITH RPTs
A. A list of all the related parties in relation to the Company shall be provided by the secretarial department to all the concerned departments, and updated from time to time, in consultation with the CFO of the Company.
B. Every department, prior to entering to any contract or arrangement with the related party, shall fill the details of contract and arrangement in the format enclosed as an annexure to the policy and submit the same to the secretarial department.
C. The secretarial department shall, within five working days of submission of details, convey to the concerned department the approvals required if any for the contract/ arrangement and approximate time within which such approval can be obtained.
D. The secretarial department may ask for further information about the contract/ arrangement, if felt necessary, to determine the nature/ type of transaction.
E. The contract/ arrangement shall not be entered without the necessary approval from the Audit Committee/ Board/ Shareholders, if such prior approvals are necessary under the policy.
F. The contract/ arrangement shall arrange for the approval of the Audit Committee/ Board/ Shareholders, as may be necessary and upon receipt of necessary approval convey the same to the concerned department.
- AMENDMENTS
Any subsequent amendment/ modification in the listing agreement and / or other applicable laws in this regard shall automatically apply to this policy.
- INTERPRETATION
A. Any word used in this policy but not defined herein shall have the same meaning as prescribed to it in the Companies Act, 2013 or rules made thereunder, SEBI Act or rules and regulations made thereunder, LODR Regulations, Accounting Standards or any other relevant legislative/ law applicable to the company.
B. The reference to the male gender in this policy shall be deemed to include areference to female gender.
C. In case of any dispute or difference upon the meaning/ interpretation f any word or provisions in this policy, the same shall be referred to the audit committee and the decision of the committee in such case shall be final. In interpreting such terms/ provisions, the committee may seek the help of the officers of the company or an outside expert as it deems fit.
- DISCLOSURE
A. SKN shall disclose details of all material transactions with Related Parties along with the quarterly Compliance Report on Corporate Governance.
B. SKN shall disclose this policy or any amendment thereof, on its website and also in the annual report.
Annexure
| SKN INDUSTRIES LIMITED Format for Reporting Related Party Transactions |
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| Sl. No. | Particulars | Details | |
| 1 | Name of the Department | ||
| 2 | Name and Designation of person submitting the form | ||
| 3 | Name of Related Party | ||
| 4 | Nature of relationship of related party with the company | ||
| 5 | Brief description of the contract/ agreement | ||
| 6 | Total Value of contract/ agreement in INR | ||
| 7 | Duration of contract/ agreement | ||
| 8 | Advance paid/ received, if any | ||
| 9 | Other material terms of contract/ agreement | ||
| 10 | Manner of determining commercial terms including pricing | ||
| 11 | Details of factor relating to the contract/ agreement not considered, if any, and rationale for the same | ||
| 12 | Whether the contract/ agreement shall be considered on arm’s length transaction under the policy. If yes, reasons/ rationale therefore | ||
| 13 | Any other relevant/ important information relating to the contract/agreement which the submitter may like to provide | ||
|
Signature of Submitter Name of Submitters |
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| Date: | |||
| To be completed by Secretarial Department | |||
| 1 | Date of the Approval by the Audit Committee | ||
| 2 | Date of the Approval by the Board |
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| 3 | Date of the Approval by the Shareholders | ||
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