1. Introduction
In terms of Section 178 of the Companies Act, 2013 and the rules made thereunder, the Nomination, Appointment and Compensation Committee (NAC Committee) of India Factoring & Finance Solutions Private Limited (Company) has formulated this policy on appointment and removal of directors on the board (Director) of the Company (Policy). The Policy has been adopted by the Company's board of Directors (Board). This policy shall, together with the policy adopted by the Company on 18 May 2015 setting out the 'fit and proper' criteria for individuals to be appointed as Directors (F&P Policy), act as a guideline for determining qualifications, positive attributes, independence of a Director and matters relating to the appointment and removal of Directors.
2. Objective of the Policy
The purpose of this Policy is as follows:
• Ensure compliance with applicable laws, rules and regulations;
• Formulation of criteria for determining qualifications, positive attributes and independence of directors;
• Formulation of a framework for evaluation of the directors, chairperson and committees.
3. Appointment of Directors
3.1 The Policy sets out principles which may be used by the NAC Committee in selecting, appointing, re-appointing (including not re-appointing) and removing a Director.
3.2 In selecting individuals for appointment, re-appointment and removal as a Director, the NAC Committee may, in addition to the criteria set out in the F&P Policy, consider the following attributes of the proposed candidate:
• Satisfaction of the criteria of independence set out in Section 149 of the Companies Act, 2013 and any other qualifications prescribed under applicable law;
• Understanding of the Company’s business and disciplines relevant to non-banking financial institutions;
• Educational and professional background;
• Experience in dealing with strategic issues and long-term perspectives;
• Number of directorships and other positions held in other businesses;
• Character and integrity which has not been brought into question;
• Personal accomplishments;
• Gender;
• Age;
• Ethnic diversity; and
• Particular field of expertise.
3.3 In case of re-appointment of a Director, the following additional criteria may also be considered:
• Past attendance at the meetings;
• Participation in meetings; and
• Contributions to the activities of the board.
3.4 Members of the NAC Committee, either jointly or individually, shall meet potential candidates and assess their suitability for the role.
3.5 The NAC Committee shall recommend the appointment of a shortlisted candidate to the Board for its consideration in accordance with this Policy.
4. Criteria of Independence
4.1 While evaluating a person for appointment or re-appointment as an independent Director (as defined under Section 149(6) of the Companies Act, 2013), the NAC Committee shall ensure that:
• the proposed candidate, in the opinion of the NAC Committee, is a person of integrity and possesses relevant expertise and experience;
• the proposed candidate is not or was not a promoter of the Company or its holding, subsidiary or associate Company;
• the proposed candidate is not related to any of the directors of the Company, its holding, subsidiary or associate Company;
• the proposed candidate does not hold nor has held the position of a key managerial personnel or is not nor has ever been an employee of the Company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;
• the proposed candidate is not employed by, or a director on the board of a competitor of the Company operating in India;
• the proposed candidate is at least 35 years of age and is not older than 70 years, unless there are strong reasons to the contrary;
• the proposed candidate satisfies such other requirements as may be set out under the F&P Policy, applicable law including the Companies Act, 2013 and the Guidelines on Compensation of Key Managerial Personnel and Senior Management in NBFCs issued by the Reserve Bank of India on 29 April 2022, as amended from time to time.
5. Removal of Directors
Subject to the provisions of the Companies Act, 2013, the articles of association of the Company and other applicable law, the NAC Committee may recommend to the Board the removal of a Director, with reasons recorded in writing, on account of (i) the likelihood of a Director being disqualified under the F&P Policy, articles of association of the Company, or the Companies Act, 2013 and rules thereunder or under any other applicable law; (ii) the outcome of an investigation undertaken by an external agency; (iii) the performance of a Director; or (iv) any significant variations in the considerations taken into account at the time V0
of appointment of the Director which will affect the ability of such Director to act as a director or to perform his role as a Director.
6. Performance Evaluation
The NAC Committee shall undertake a performance evaluation of each of the Directors, on an annual basis, taking into account various factors such as attendance of meetings, participation at meetings, contribution to the activities of the Board, age, policies of the Company, etc.
7. Adoption, Review and Changes
This Policy and any changes thereof will be approved by the board of Directors based on the recommendation(s) of the NAC Committee. This Policy may be reviewed at such intervals as the board of Directors or NAC Committee may deem necessary.
8. Director Remuneration
While deciding the remuneration of Directors, the NAC Committee may consider amongst other things, the duties and responsibilities cast by the RBI through its enactment, various rules and regulations, the Companies Act, 2013, the articles of association of the Company, restrictions on the remuneration to Directors and the remuneration drawn by Directors of other companies in the industry, the valuable contributions and inputs from Directors based on their knowledge, experience and expertise in shaping the destiny of the Company, etc. This Policy is guided by the principles and objectives set out by the RBI, and as more fully and particularly envisaged under Section 178 of the Companies Act, 2013.
• Payment of sitting fees and reimbursement of expenses to independent Directors
The Board shall fix the sitting fees payable to independent Directors for attending the meetings of the Board or committee thereof from time to time and are eligible for reimbursement of expenses for participation in the Board or Committee meetings and other meetings.
• Payment of Sitting Fees and Reimbursement of Expenses to Non-Executive Directors and Nominee Directors
As remuneration for serving on the Board, the Company's:
(a) non-executive Directors (i.e., Directors other than a whole-time director as defined in Section 2(94) of the Act); and
(b) the nominee Directors (i.e., Directors nominated by any financial institution in pursuance of the provisions of any law for the time being in force, or of any agreement, or appointed by any government, or any other person to represent its interests),
shall be entitled to sitting fees or reimbursement of expenses, as the Board may determine from time to time.
