RPT Policy
  • INTRODUCTION

    This Policy deals with the Related Party Transactions (RPTs) in terms of RBI guidelines, Companies Act, 2013 and Accounting Standard -18 other applicable laws, if any prescribing for formulation of RPT Policy. The audit committee will review and may amend the policy from time to time.

  • DEFINITIONS

    “Associate Company”, in relation to another company, means a company in which that other company has significant influence, but which is not a subsidiary company of the company having such influence and includes a joint Venture company.

    Explanation- For the purpose of this clause, “significant influence” means control of at least 20% of total share capital, or of business decisions under an agreement.

    “Audit Committee” or “Committee” means “Audit Committee” constituted by the Board of Directors of the company, from time to time, under provisions of the Companies Act, 2013 and RBI Guidelines.

    “Board of Directors” or “Board” means the Board of Directors of India Factoring and Finance Solutions Private Limited.

    “Body Corporate” or “corporation” includes a company incorporated outsideIndia, but does not include —

    • a co-operative society registered under any law relating to co-operativesocieties; and
    • any other body corporate (not being a company as defined in this Act),which the Central Government may, by notification, specify in this behalf;

    “Company” means India Factoring and Finance Solutions Private Limited (IFFSPL).

    “Control” shall have meaning as per Companies Act 2013 & Rules made thereunder and as per Accounting Standard.

    “Joint Ventures” – A contractual arrangement whereby two or more parties undertake an economic activity which is subject to joint control.

    “Key Managerial Personnel” in relation to a company, means-

    • The Chief Executive Officer or the Managing Director or the Manager;
    • The Company Secretary;
    • The Whole-time Director;
    • The Chief Financial Officer; and
    • Such other officer as may be prescribed under Companies Act 2013.

    “Related Party” with reference to IFFSPL means:

    • a director or his relative;
    • a key managerial personnel or his relative;
    • a firm, in which director, manager or his relative is a partner;
    • a private company in which a director or manager is a member or director;
    • a public company in which a director or manager is a director and holds along with his relatives, more than 2% of its paid-up share capital;
    • any body-corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;
    • any person on whose advice, directions or instructions a director manager is accustomed to act:
      Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity.
    • any company which is-
      • a holding, subsidiary or an associate company of such company; or
      • a subsidiary of a holding company to which it is also a subsidiary;
    • A director or key managerial personnel of the holding company or his relative with reference to a company shall be deemed to be a related party.
    • Parties are considered to be related if at anytime during the reporting period one party has the ability tocontrol the other party or exercise significant influence over theother party in making financial and/or operating decisions.

    “Relative”, with reference to any person, means anyone who is related to another, if-

    • They are members of a Hindu Undivided Family;
    • They are husband and wife; or
    • One person is related to the other in such manner as may be prescribed

    List of relatives as per rule 4 of chapter I and AS-18

    A person shall be deemed to be relative of another, if he or she is related to another in the following manner, namely:-

    • Father including ‘Step-Father’
    • Mother including ‘Step-Mother’
    • Son including ‘Step-Son’, Son’s wife.
    • Daughter including ‘Daughter’s husband’’
    • Brother including ‘Step-Brother’
    • Sister including ‘Step-Sister’

    “Related Party Transactions” means transactions specified in section 188 of the Companies Act, 2013 and as amended from time to time.

  • IDENTIFICATION OF POTENTIAL RELATED PARTY TRANSACTIONS

    The Company Secretary keeps a database of Related Parties containing the names of individuals and Companies identified based on the definition of Related Party and declaration provided by the Directors, including any revisions therein, and intimates to the Management as soon the Company Secretary has been intimated of such changes in Related Party. The list of Related Party shall be updated whenever necessary and reviewed on a timely basis and would be communicated to the functional departments.

    Each Director and Key Managerial Personnel is responsible for providing declaration to the Company Secretary of Related Party involving him or her or his or her Relative, including any additional information that the Company Secretary may reasonably request.

    The functional departments shall submit to the head of Finance & Accounts and the Company Secretary, the details of proposed transaction (except those for which omnibus approval has been granted by the Audit Committee as explained subsequently) with draft agreement or other supporting documents justifying that the transactions are on arm’s length basis at prevailing market rate. Based on such information, the Company Secretary will facilitate for the necessary approval from the Audit Committee.

  • DEALING WITH RELATED PARTY TRANSACTIONS
    • Approval by Audit Committee

      All Related Party Transactions (RPTs) (including any subsequent modifications thereof) shall require approval of the Audit Committee of Directors. However, the Audit Committee of Directors may grant omnibus approval for the RPTs proposed to be entered into by the Company subject to the following conditions:

      • The Audit Committee shall, obtain approval of the Board of Directors, specify the criteria for making the omnibus approval for financial year and same shall be amended from time to time
      • The Audit Committee may grant the omnibus approval in line with the policy on Related Party Transactions of IFFSPL for the related party transactions.
      • The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of IFFSPL.
      • Such omnibus approval shall specify:
        • The name(s) of the Related Party, nature of transaction, period of transaction, maximum amount of transaction that can be entered into in a year.
        • Maximum value per transaction which can be allowed
        • The indicative base price/current contracted price and the formula for variation in the price if any,
        • Such other conditions as Audit Committee may deem fit.
      • Audit Committee shall review, on a quarterly basis, the details of RPTs entered into by IFFSPL pursuant to each of the omnibus approval given.
      • Such omnibus approvals shall be valid for a period notexceeding one year and shall require fresh approvals after the expiry of one year.
    • Approval by Board of Directors

      Except with the consent of the Board of Directors given by a resolution at a meeting of the board, IFFSPL shall not enter into any contract or arrangement with a related party with respect to-

      • Sale, purchase or supply of any goods or materials;
      • Selling or otherwise disposing of, or buying, property of any kind;
      • Leasing of Property of any kind;
      • Availing or rendering of any services;
      • Appointment of any agent for purchase or sale of goods, materials, services or property;
      • Such related party’s appointment to any office or place of profit in the company, its subsidiary company or associate company; and related party transactions.
      • Underwriting the subscription of any securities or derivatives thereof, of the company:
        Provided that nothing of the above shall apply to any transactions entered into by IFFSPL in itsordinary course of business other than transactions which are not on an arm’s length basis.
    • Approval by Shareholders

      Since the Company is having paid up capital of more than 10 crore, all the transactions which are specified in 188 of the Companies Act, 2013 and which are not in the ordinary course of business & arms’ length basis shall require approval of shareholders by way of resolution.

  • PRE-REQUISITES FOR ENTERING INTO POTENTIAL RELATED PARTY TRANSACTIONS
    • Audit Committee / Board Level Pre-requisites:

      IFFSPL shall enter into any contract or arrangement with a related party subject to the following conditions.

      The agenda of the Board/ Audit Committee Meeting, as the case may be, 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 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
      • And other information relevant or important for the Board to take a decision on the proposed transaction.

      Where any director is interested in any contract or arrangement with a related party, such director shall not be present at the meeting during discussions on the subject matter of the resolution relating to such contract or arrangement-

    • Shareholders’ Level Pre-requisites

      For approval of the shareholders, a notice calling the General Meeting will be sent along with the explanatory statement to the Shareholders.

      The explanatory statement to be annexed to the notice of a General Meeting convened for approval of the RPTs 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;
      • Any other information relevant or important for the members to take a decision on the proposed resolution;
  • TRANSACTIONS NOT PREVIOUSLY APPROVED

    In the event the Company becomes aware of an RPT that has not been approved or ratified under this Policy, the transaction shall be placed as promptly as practicable before the Audit Committee or Board or the Shareholders as may be required in accordance with this Policy for review and ratification.

    The Audit Committee or the Board shall consider all relevant facts and circumstances regarding such transaction and shall evaluate all options available to the Company, including but not limited to ratification, revision, or termination of such transaction, and the Company shall take such action as the Audit Committee / the Board deems appropriate under the circumstances.

  • DISCLOSURE REQUIREMENTS

    This Policy will be communicated to all operational employees and other concerned persons of the IFFSPL and shall be placed on the website of the IFFSPL.

  • CONSEQUENCE OF NON-APPROVAL/VIOLATION OF PROVISIONS OF RELATED PARTY TRANSACTIONS
    • Where any contract or arrangement is entered into by a director or a KMP, without obtaining the consent of the Board or approval by a special resolution in the general meeting as required and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting within three months from the date on which such contract or arrangement shall be voidable at the option of the Audit Committee / Board and if the contract or arrangement is with related party to any director or a KMP, or is authorized by any other director concerned shall indemnify the company against any loss incurred by it.
    • Without prejudice to anything in the above para, it shall be open to IFFSPL to proceed against a director or a KMP or any other employee who had entered into such 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.
    • Any director or a KMP of IFFSPL who had entered into or authorized the contract or arrangement in violation of the provisions of section 188 of the Companies Act 2013, in relation to RPTs may be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than twenty five-thousands rupees but which may extend to five lakh rupees, or both, in case of conviction.