CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT
SANMATI PRECISION ENGINEERING LIMITED (the “Company”) is committed to conducting its business in accordance with applicable laws, rules and regulations and the highest standards of business ethics and ethical conduct. This code of conduct (this “Code”) reflects the business practice and principles of behavior that support this commitment. The Board of Directors (the “Board”) and such personnel of the Company who are members of its core management team (excluding the members of the Board) comprising all members of management one level below the executive directors, including the functional heads (the “Senior Management”) are responsible for setting the standards of conduct contained in the Code and for updating these standards as appropriate to reflect legal and regulatory developments.
Unless the context otherwise requires, words and expressions used in this policy and not defined herein but defined in the Companies Act, 2013 and the rules framed thereunder as may be amended from time to time shall have the meaning respectively assigned to them therein.
This Code is intended to provide guidance and help in recognizing and dealing with ethical issues and to help foster a culture of honesty and accountability. Every Director and member of Senior Management is expected to read and understand this Code and its application to the performance of his or her duties, functions and responsibilities.
Every Director and member of Senior Management shall:
- exhibit high standards of integrity, commitment and independence of thought and judgment;
- dedicate adequate time, energy and attention to ensure the diligent performance of his/her duties;
- make all reasonable efforts (to the extent required under applicable statutes/regulations) to attend Board or Board committee meetings and act in accordance with the Articles of Association of the Company;
- act in good faith in order to promote the objects of the Company for the benefit of its members as a whole, and in the best interests of the Company, its employees and shareholders;
- exercise his / her duties with due and reasonable care, skill and diligence and shall exercise independent judgment;
- not involve in a situation in which he/she may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the Company;
- not achieve or attempt to achieve any undue gain or advantage either to himself/herself or to his / her relatives, partners, or associates pursuant to his / her position as a Director or member of Senior Management of the Company and if such Director or member of Senior Management is found guilty of making any undue gain, he / she shall be liable to pay an amount equal to two times the gain to the Company and such other disciplinary action as may be decided by the Board;
- not assign his / her office, and any assignment so made shall be void; and
- comply with every provision of this Code.
- Conflicts of Interest
Directors and Senior Management must avoid conflicts of interest. Directors and Senior Management should also be mindful of, and seek to avoid, conduct which could reasonably be construed as creating an appearance of a conflict of interest. While Directors and Senior Management should be free to make personal investments and enjoy social relations and normal business courtesies, they must not have any interests that adversely influence the performance of their duties, functions and responsibilities as Directors and Senior Management of the Company. A conflict of interest can arise when improper personal benefits accrue to a Director or member of Senior Management or a member of his/her immediate family as a result of his/her position as a Director or member of Senior Management of the Company. A conflict situation can also arise when a Director or member of Senior Management takes an action or has an interest that may make it difficult for him or her to perform his or her duties, functions and responsibilities objectively and effectively.
While the Code does not attempt, and indeed it would not be possible, to describe all conceivable conflicts of interest that could develop, the following are some examples of situations which may constitute conflicts of interest:
- Working, in any capacity, for a competitor, customer, supplier or other third party while occupying the position of a Director or Senior Management of the Company;
- Competing with the Company for the purchase or sale of property, products, services or other interests;
- Directing business to a supplier owned or managed by, or which employs, a relative or friend;
- Receiving loans or guarantees of obligations as a result of one’s position as a Director or Senior Management;
- Accepting bribes, kickbacks or any other improper payments for services relating to the conduct of the business of the Company; and
- Accepting, or having a member of a Director’s or Senior Management’s family accept, a gift from persons or entities that deal with the Company, where the gift is being made in order to influence the Director’s or Senior Management’s actions as a member of the Board or Senior Management, or where acceptance of a gift could otherwise reasonably create the appearance of a conflict of interest.
Conflicts of interest may not always be clear cut. Any question therefore about a Director’s or Senior Management’s actual or potential conflict of interest with the Company should be brought promptly to the attention of the Chairman of the Board or the Compliance Officer, who will review the question and determine a proper course of action, including whether consideration or action by the full Board is necessary. Directors or Senior Management involved in any conflict or potential conflict situations shall disclose such conflict or potential conflict to the Board and recuse themselves from any discussion or decision relating thereto.
- Corporate Opportunity
Directors and Senior Management shall not:
- compete with the Company; or
- take for themselves personally any business opportunities that belong to the Company or are discovered through the use of corporate property, information or position; or
- use corporate property, information or position for personal gain.
All Directors and members of Senior Management must maintain the confidentiality of confidential information entrusted to them or disclosed or acquired by them in carrying out their duties and responsibilities, except where such disclosure is authorised by the Company or is required by laws, regulations or legal proceedings. The term “confidential information” includes, but is not limited to, non-public information that might be of use to competitors of the Company or harmful to the Company or its customers, if disclosed. Whenever feasible, Directors and Senior Management should consult the Chairman of the Board or the Compliance Officer if they believe they have a legal obligation to disclose confidential information.
- Fair Dealing
Directors and Senior Management should endeavor to deal fairly with the Company’s customers, suppliers, competitors, officers and employees. No Director or member of Senior Management shall take unfair advantage of the Company’s customers, suppliers, competitors or employees through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice. Gifts or entertainment in any form that is likely to result in a feeling of expectation of personal obligation should not be extended or accepted.
VI. Protection and proper use of Company’s assets
Directors and Senior Management should perform their duties in a manner that protects the Company’s assets and ensures their efficient use. The Company’s assets should be used for legitimate business purposes.
VII. Reporting any illegal or unethical behavior
Directors and Senior Management are encouraged to promptly contact the Chairman of the Board or the Compliance Officer if the Director or Senior Management believes that he or she has observed illegal or unethical behavior by any employee, officer or director, or by any one purporting to be acting on the Company’s behalf or any violation or possible violation of this Code and the reporting Director or Senior Management has any doubt as to the best course of action in a particular situation. Confidentiality will be maintained, to the extent permitted by law.
VIII. Public Company Reporting
As a public company, it is of critical importance that the Company’s filings with the Ministry of Corporate Affairs, the Securities and Exchange Board of India, the Reserve Bank of India, the concerned Stock Exchange(s) on which the securities of the Company may be listed and/or other regulatory authorities be full, fair and accurate. The Directors and Senior Management shall provide information necessary to ensure that the Company’s published reports meet these requirements. The Company expects Directors and Senior Management to provide prompt and accurate answers to enquiries relating to its public disclosure requirements. While making public disclosures, all material facts will be stated and there will be no concealment or misrepresentation of information or data.
IX. Record Keeping
All books, records, accounts and financial statements will be maintained in reasonable detail, appropriately reflect transactions and conform to both applicable legal requirements and systems of internal control.
- Compliance with Law
Directors and Senior Management are required to comply with all applicable laws, rules and regulations, both in letter and spirit. In order to assist the Company in promoting lawful and ethical behavior, Directors and Senior Management must report to the Chairman of the Board or the Compliance Officer any possible violation of law, rules, regulations or provisions of this Code.
XI. Independent Directors
The independent directors of the Company shall adhere to schedule IV of the Companies Act, 2013 and fulfill the duties and responsibilities stated therein as follows:
- Guidelines of professional conduct: An independent director shall:
- uphold ethical standards of integrity and probity;
- act objectively and constructively while exercising his duties;
- exercise his responsibilities in a bona fide manner in the interest of the Company;
- devote sufficient time and attention to his professional obligations for informed and balanced decision making;
- not allow any extraneous considerations that will vitiate his exercise of objective independent judgment in the paramount interest of the Company as a whole, while concurring in or dissenting from the collective judgment of the Board in its decision making;
- not abuse his position to the detriment of the Company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person;
- refrain from any action that would lead to loss of his independence;
- where circumstances arise which make an independent director lose his independence, the independent director must immediately inform the Board accordingly; and
- assist the Company in implementing the best corporate governance practices.
- Role and functions: The independent directors shall:
- help in bringing an independent judgment to bear on the Board’s deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct;
- bring an objective view in the evaluation of the performance of Board and management;
- scrutinize the performance of management in meeting agreed goals and objectives and monitor the reporting of performance;
- satisfy themselves on the integrity of financial information and that financial controls and the systems of risk management are robust and defensible;
- safeguard the interests of all stakeholders, particularly the minority shareholders;
- balance the conflicting interest of the stakeholders;
- determine appropriate levels of remuneration of executive directors, key managerial personnel and senior management and have a prime role in appointing and where necessary recommend removal of executive directors, key managerial personnel and senior management; and
- 8) moderate and arbitrate in the interest of the Company as a whole, in situations of conflict between management and shareholder’s interest.
- Duties: The independent directors shall:
- undertake appropriate induction and regularly update and refresh their skills, knowledge and familiarity with the Company;
- seek appropriate clarification or amplification of information and, where necessary, take and follow appropriate professional advice and opinion of outside experts at the expense of the Company;
- strive to attend all meetings of the Board and of the committees of the Board of which he is a member;
- participate constructively and actively in the committees of the Board in which they are chairpersons or members;
- strive to attend the general meetings of the Company;
- where they have concerns about the running of the Company or a proposed action, ensure that these are addressed by the Board and, to the extent that they are not resolved, insist that their concerns are recorded in the minutes of the Board meeting;
- keep themselves well informed about the Company and the external environment in which it operates;
- not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board;
- pay sufficient attention and ensure that adequate deliberations are held before approving related party transactions and assure themselves that such transactions are in the interest of the Company;
- ascertain and ensure that the Company has an adequate and functional vigil mechanism and to ensure that the interests of a person who uses such mechanism are not prejudicially affected on account of such use;
- report concerns about unethical behavior, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy;
- acting within his authority, assist in protecting the legitimate interests of the Company, shareholders and its employees; and
- not disclose confidential information, including commercial secrets, technologies, advertising and sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly approved by the Board or required by law.
- Separate meetings
- The independent directors of the Company shall hold at least one meeting in a year, without the attendance of non-independent directors and members of management;
- All the independent directors of the Company shall strive to be present at such meeting;
- The meeting shall:
- review the performance of non-independent directors and the Board as a whole
- review the performance of the Chairperson of the Company, taking into account the views of executive directors and non-executive directors;
- assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
- Evaluation mechanism
- The performance evaluation of independent directors shall be done by the entire Board, excluding the director being evaluated.
- On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent director.
All Board members and Senior Management shall affirm compliance with this Code on an annual basis, within 30 days of close of every financial year to the Compliance Officer, in the form annexed hereto as Annexure I. The Annual Report of the Company shall contain a declaration to this effect signed by the Chief Executive Officer or Managing Director or Joint Managing Director of the Company.
This Code shall be publicly disclosed as required by applicable law or regulation, including by publishing it on the website of the Company.
XIV. Amendment, Modification and Waiver
This Code may be amended, modified or waived only by the Company’s Board of Directors. As a general policy, the Board will not grant waivers to the Code. This Code may, from time to time be extended to other senior officers of the Company, as the Board may think fit.
(B) Vigil mechanism Policy / Whistle Blower Policy*
- Mr. Shital Adinath Ketkale, Managing Director of the Company, be and is hereby appointed as a Vigilance Officer to hear the grievances of the employees with any person in the company and take steps to resolve the issues amicably and report the same to Board of Director or to the Chairman of the Company.
- offences of serious nature may be brought to the attention of the Chairman of the Audit Committee of the Company who shall after hearing the concerned person award appropriate punishment to the offender.
- in case of repeated frivolous complaints being filed by a director or an employee, the audit committee or the director nominated to play the role of audit committee may take suitable action against the concerned director or employee including reprimand.”
(C) Policy on dealing with related party transactions*
RELATED PARTY TRANSACTION POLICY
This policy is framed as per the requirement of Regulation 23 of Securities and Exchange Board of India, (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR”) and is intended to ensure the proper approval and reporting of transaction between the Company and its Related Parties as determined under SEBI (LODR) Regulations, 2015, Section 188 of the Companies Act, 2013 and rules prescribed thereunder (“Act”), and any other laws and regulations as may be applicable to the Company.
The Board of Directors (“Board“) of Sanmati Precision Engineering Limited (the “Company”) has adopted the following policy and procedures with regard to the Related Party Transactions on June 01, 2019. The Audit Committee shall review and may propose amendments to this policy as may be required.
The policy will be applicable to the Company. This policy is to regulate transactions between the Company and its related parties based on the laws and regulations applicable on the company.
The Company is required to disclose in its Annual Financial Statements and Directors’ Report, certain transactions between the Company and Related Parties as well as policy relating thereto. The Related Party Transaction Policy shall be disclosed on the website of the Company and a web link thereto shall be provided in the Annual Report.
“Arm’s Length Transaction” means a transaction between two related parties that isconducted as if they were unrelated, so that there is no question of conflict of interest.
“Associate” means a Company as defined under section 2(6) of the Companies Act, 2013 and asdefined by Accounting Standard (AS) 23, “Accounting for Investments in Associates in Consolidated Financial Statements” and by Accounting Standard (AS) 18, “Related party disclosures”.
“Audit Committee or Committee” means the Committee of the Board formed undersection 177 of the Act and Regulations 18 of SEBI (LODR) Regulations, 2015.
“Board” means Board of Directors of the Company.
“Control” means control as defined in Section 2 (27) of the Act and shall have the samemeaning as defined in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
“Key Managerial Personnel” shall mean the officers of the Company as defined in Section 2(51)of the Act.
“Policy” means Related Party Transaction Policy.
“Material Related Party Transaction” means a transaction with a related party where thetransaction/transactions to be entered into individually or taken together with previous transactions during a financial year, exceeds ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company.
“Related Party” as defined under SEBI (LODR) Regulations, 2015 is as under –
An entity shall be considered as related to the Company if:
- Such entity is a related party under section 2 (76) of the Companies Act, 2013; or
- Such entity is a related party under the applicable accounting standards.
Section 2(76) of the Companies Act, 2013, as referred above, defines Related Party as —
- A Director or his relative;
- A Key Managerial Personnel or his relative;
- A firm, in which a 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 two per cent. of its paid-up share capital;
- Anybody 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; [Except advice, directions or instructions given in a professional capacity]
- Any person on whose advice, directions or instructions a director or manager is accustomed to act.[Except 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 other than an Independent Director or Key Managerial Personnel of the holding Company or his relative with reference to a Company.
“Relative”: with reference to any person, means who is related to another, if:-
- They are members of a Hindu Undivided Family;
- They are Husband or wife or
- One person is related to the another in the following manner, namely:-
- Father, includes step-father.
- Mother, includes step-mother.
- Son, includes step-son.
- Son’s wife.
- Daughter’s husband.
- Brother, includes step-brother.
- Sister, includes step-sister.
“Related Party Transactions”
“Related party transaction” means a transfer of resources, services or obligations between a listed entity and a related party, regardless of whether a price is charged and a “transaction” with a related party shall be construed to include a single transaction or a group of transactions in a contract.
Explanation: A transaction with a related party shall be construed to include single transaction or a group of transactions in a contract.
As per Section 188 of the Act, contracts or arrangements with 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
- Underwriting the subscription of any securities or derivatives thereof, of the Company.
“Collectively the Related Party Transaction shall constitute the above.”
“Subsidiary” means a Company as defined under section 2(87) of the Companies Act, 2013 and asdefined by Accounting Standard (AS) 23, “Accounting for Investments in Associates in Consolidated Financial Statements” and by Accounting Standard (AS) 18, “Related party disclosures”.
Transactions in “ordinary course of business” shall mean and include-
- Transactions that are entered in the normal and usual course of business and are identical to the business of the company.
- Transactions that is reasonable in the context of the business of the company.
- Transactions that are part of the standard industry practice.
- IDENTIFICATION OF RELATED PARTY
Each director and Key Managerial Personnel is responsible for providing notice to the Board or Audit Committee regarding persons and entities to be considered as “Related Party” by virtue of his/her being Director/KMP in the entity or holding certain shareholding percentage. Such notice shall be provided to the company at the time of appointment and also at the time of first board meeting in every financial year and whenever there is any change in the disclosures already made.
- IDENTIFICATION OF POTENTIAL RELATED PARTY TRANSACTIONS
Each director and Key Managerial Personnel is responsible for providing notice to the Board or Audit Committee of any potential Related Party Transaction involving him or her or his or her Relative, including any additional information about the transaction that the Board/Audit Committee may reasonably request. Board/Audit Committee will determine whether the transaction does, in fact, constitute a Related Party Transaction requiring compliance with this policy.
- TERMS OF THE POLICY
- All Related Party Transactions must be reported to the Audit Committee and referred for approval by the Committee in accordance with this Policy.
- All the Related Party Transactions proposed to be entered shall require prior approval of the Audit Committee including the transactions to be entered in the ordinary course of business. The Audit Committee shall accordingly recommend the Related Party Transaction for the approval of Board of Directors/ Shareholders as per the terms of this policy.
- All the Related Party Transactions prescribed under Section 188 of Companies Act, 2013 and within the threshold limits prescribed under rule 15 sub rule(3) of Companies (Meetings of Board and its Powers) Second Amendment Rules, 2014, shall along with the prior approval of Audit Committee shall also require approval of the Board of Directors.
- All the Material Related Party Transactions and Related Party Transactions, exceeding the threshold limits prescribed under rule 15 sub rule (3) of Companies (Meetings of Board and its Powers) Second Amendment Rules, 2014 shall require prior approval of the Audit Committee, Board of Directors and Shareholders of the Company by way of Resolution prescribed under section 188 of the Act and SEBI (LODR) Regulations, 2015.
- REVIEW AND APPROVAL OF RELATED PARTY TRANSACTIONS
All Related Party Transactions must be reported to the Audit Committee for its prior approval in accordance with this policy. The Committee shall review the transaction and report the same for approval of the Board and shareholders, if required, in accordance with this policy.
Approval of Audit Committee
- All Related Party Transactions shall require prior approval of the Audit Committee either at a meeting or by resolutions by circulations. Any member of the committee who has potential interest in any related party transaction will abstain from discussion and voting on the approval of the related party transaction.
- Audit Committee shall have all rights to call for information/documents in order to understand the scope of the proposed related party transactions.
- The Audit Committee may grant omnibus approval for the proposed Related Party Transaction subject to the following conditions:
- The Audit Committee shall lay down the criteria for granting 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;
- The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of the Company;
- Such omnibus approval shall specify the following:
- Name(s) of the Related Party;
- Nature of the 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.
- In such cases where the need for Related Party Transaction cannot be foreseen and details as required above are not available, the Audit Committee may grant omnibus approval for such transactions subject to their value not exceeding Rs. 1 crore per transaction;
- The 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 approval given;
- Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.
Approval of Board of Directors
- If the Committee determines that a Related Party Transaction should be brought before the Board, or if the Board in any case elects to review any such matter or it is mandatory under any law for the Board to approve a Related Party Transaction, then the Board shall consider and approve the Related Party Transaction at a meeting and the considerations set forth above shall apply to the Board’s review and approval of the matter, with such modification as may be necessary or appropriate under the circumstances.
- All the Related Party Transactions prescribed under Section 188 of the Act, which are not in the ordinary course of business or not at Arm’s Length Basis and all material Related Party Transactions shall be brought before the Board and the Board shall consider and approve the related party transaction at a meeting.
- Any member of the Board who is interested or has potential interest (as mentioned under section 184(2) of the Act), in any Related Party Transaction shall not be present at the meeting during discussions on the subject matter of the resolution relating to such Related Party Transaction.
Approval of Shareholders
- All the Material Related Party Transactions shall require approval of the shareholders through resolution prescribed under section 188 of the Act and SEBI (LODR) Regulations, 2015 and the Related Parties shall abstain from voting on such resolution. The related parties referred here shall abstain from voting irrespective of whether the entity is a party to the particular transaction or not.
- All the Transactions, other than the Material Related Party Transaction, with the related parties which are not in the Ordinary Course of Business and at Arms’ Length shall, subject to the limits mentioned in Rules 15(3) of the Companies (Meeting of Board and its Power) Rules, 2014, also require the approval of the shareholders through resolution prescribed under section 188 of the Act and SEBI (LODR) Regulations, 2015 and the Related Parties shall abstain from voting on such resolution.
Transactions that, require previous approval of Shareholders of the Company, as prescribed under rule 15(3) of the Companies (Meeting of Board and its Powers ) Rules, 2014, includes the transactions/ contracts/ arrangements as follows :
- Sale, purchase or supply of any goods or materials, directly or through appointment of agent, exceeding 10% of the turnover of the company or Rs. 100 crore, whichever is lower, as mentioned in clause (a) and clause (e) respectively of sub-section (1) of section 188 of Companies Act, 2013;
- Selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, exceeding 10% of net worth of the company or Rs. 100 crore, whichever is lower, as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188 of Companies Act, 2013;
- Leasing of property of any kind exceeding 10% of the net worth of the company or 10% of turnover of the company or Rs. 100 crore, whichever is lower, as mentioned in clause (c) of sub-section (1) of section 188 of Companies Act, 2013;
- Availing or rendering of any services, directly or through appointment of agent, exceeding 10% of the turnover of the company or Rs. 50 crore, whichever is lower, as mentioned in clause (d) and clause (e) respectively of sub-section (1) of section 188 of Companies Act, 2013.
These limits shall however, apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.
- However, transactions with wholly owned subsidiaries are exempt for approval of shareholders.
Transaction not requiring approval of Audit Committee, Board or Shareholders
- Notwithstanding the foregoing, the following Related Party Transactions shall not require approval of Audit Committee, Board or Shareholders:
- Any transaction that involves the providing of compensation to a director or Key Managerial Personnel in connection with his or her duties to the Company or any of its subsidiaries or associates, including the reimbursement of reasonable business and travel expenses incurred in the ordinary course of business.
- Any transaction in which the Related Party’s interest arises solely from ownership of securities issued by the Company and where all holders of such securities receive the same benefits pro rata as the Related Party.
Transaction not requiring approval of Board or Shareholders
- Pursuant to clarification provided in circular No.30/2014 dated 17th July, 2014 of Ministry of Corporate Affairs, Contracts entered into by companies, after making necessary compliances under Section 297 of the Companies Act, 1956, which already came into effect before the commencement of Section 188 of the Companies Act, 2013, will not require fresh approval under the said section 188 till the expiry of the original term of such contracts. Thus, if any modification in such contract is made on or after April 01, 2014, the requirements under section 188 will have to be complied with.
- CRITERIA FOR APPROVAL OF A RELATED PARTY TRANSACTION BY THE BOARD / AUDIT COMMITTEE
- To review a Related Party Transaction, the Board / Audit Committee will be provide with all relevant material information of the Related Party Transaction, including the terms of the transaction, the business purpose of the transaction, the benefits to the Company and to the Related Party, and any other relevant matters.
The information provided shall specifically cover the following:
- 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;
- the persons/authority approving the transaction; and
- any other information relevant or important for the Committee to take a decision on the proposed transaction.
- In determining whether to approve a Related Party Transaction, the Board/ Audit Committee shall consider the following factors, amongst others, to the extant relevant to the Related Party Transaction:-
- Whether the transaction is in the ordinary course of business of the company.
- Whether the terms of the Related Party Transaction are fair and on arm’s length basis to the Company and would apply on the same basis if the transaction did not involve a Related Party;
- Whether there are any undue compelling business reasons for the Company to enter into the Related Party Transaction and the nature of alternative transactions, if any;
- Whether the Related Party Transaction would affect the independence of the directors/KMP;
- Whether the proposed transaction includes any potential reputational risk issues that may arise as a result of or in connection with the proposed transaction;
- Where the ratification of the Related Party Transaction is allowed by law and is sought from the Committee, the reason for not obtaining the prior approval of the Committee and the relevance of business urgency and whether subsequent ratification would be detrimental to the Company; and
- Whether the Related Party transaction would present an improper conflict of interest for any director or Key Managerial Personnel of the Company, taking into account the size of the transaction, the overall financial position of the director, Executive Officer or other Related Party, the direct or indirect nature of the director’s, Key Managerial Personnel’s or other Related Party’s interest in the transaction and the ongoing nature of any proposed relationship and any other factors the Board/Committee deems relevant.
- Every Director of a Company 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 a body corporate in which such director or such director in association with any other director, holds more than two per cent. shareholding of that body corporate, or is a promoter, manager, Chief Executive Officer of that body corporate; or
- With a firm or other entity in which, such director is a partner, owner or member, as the case may be, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting:
Provided that where any director 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.
- All Directors/ KMPs are required to disclose the entities in which they or their relatives are or deemed to be interested, in the prescribed form.
- Each Director and KMP of the Company shall promptly notify the Company Secretary of the Company of any material transaction or Relationship that could reasonably be expected to give rise to any conflict of interest.
- The Company shall maintain Register pertaining to related party transactions in the prescribed form.
- The related party transaction entered into with the related party/ies shall be disclosed in the Director Report / Annual Report as per the disclosure requirement of the Act.
- The company shall disclose the policy on dealing with Related Party Transactions on its website and a web link thereto shall be provided in the Annual Report.
- Details of all material transactions with related parties shall be disclosed, quarterly in the Compliance Report on Corporate Governance, as required under listing agreement.
- Any Related Party Transaction entered into without obtaining the prior approval of the Audit/ Board/ Shareholders(respective authority/ies) may be ratified, subject to the applicable provisions of the Companies Act, 2013 and the SEBI LODR 2015, if post review of the said transaction/ contract, the appropriate authority is satisfied, that the said Related Party Transaction is not detrimental to the interest of the Company, however, the appropriate authority may also ratify such transaction or contracts, with or without the modification(s).
- Where any contract or arrangement is entered into, without obtaining the consent of the Audit Committee, Board or approval by a Resolution in the General Meeting 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 was entered into, such contract or arrangement shall be voidable at the option of the Board.
- 10.3 If the appropriate authority decides, not to approve a particular transaction, it may require the Related Party to reimburse the benefits which might have accrued to it and/ or indemnify the Company with regard to the subject Related Party Transaction which is not approved by the appropriate authority.
- However the Related Party transaction which are entered into without the approval of the appropriate authority and subsequently not ratified by the appropriate authority, the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 shall apply.
- AMENDMENTS TO THE POLICY
11.1 The Board of Directors on its own and / or as per the recommendations of Audit Committee can amend this Policy, as and when deemed fit. Any or all provisions of this Policy would be subject to revision /amendment in accordance with the Rules, Regulations, Notifications etc. on the subject as may be issued by relevant statutory authorities, from time to time.
11.2 In case of any amendment(s), clarification(s), circular(s) etc. issued by the relevant authorities, not being consistent with the provisions laid down under this Policy, then such amendment(s), clarification(s), circular(s) etc. shall prevail upon the provisions hereunder and this Policy shall stand amended accordingly from the effective date as laid down under such amendment(s), clarification(s), circular(s) etc.
This Policy will be communicated to all operational employees and other concerned persons of the Company and shall be placed on the website of the company
POLICY FOR DETERMINATION OF MATERIAL EVENT/DISCLOSURE
The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR“) came into force from December 01, 2015. As per Regulation 30 of SEBI (LODR) Regulations, Sanmati Precision Engineering Limited (“the Company“) is required to frame a Policy for Determination of Material Events and Information.
Accordingly, the Board of Directors of the Company on June 01, 2019 has adopted the policy for determination of materiality of event/disclosure (“Policy“).
- OBJECTIVE AND SCOPE
The objectives of this Policy are as follows:
- To ensure that the Company complies with the disclosure obligations to which it is subject as a publicly-traded company as laid down by the SEBI (LODR) Regulations, 2015 various Securities Laws and any other legislations;
- To ensure that the information disclosed by the Company is adequate, timely and transparent;
- To ensure that all investors have equal access to important information that may affect their investment decisions;
- To protect the confidentiality of Material / Price sensitive information within the context of the Company’s disclosure obligations;
- To provide a framework that supports and fosters confidence in the quality and integrity of information released by the Company and avoiding establishment of false market in the securities of the Company;
- To ensure uniformity in the Company’s approach to disclosures, raise awareness and reduce the risk of selective disclosures;
- To determine the principles of materiality based on which the Company shall make disclosures of events or information.
The information covered by this Policy shall include information related to the Company’s business, operations, or performance which has a significant effect on securities investment decisions (“Material Information”) that the Company is required to disclose in a timely and appropriate manner by applying the guidelines for assessing materiality. The Board vide this Policy has attempted to prescribe guidance for deciding the magnitude of the materiality of events and information.
- “Act” means the Companies Act, 2013 and the Rules framed thereunder, including any modifications, amendments, clarifications, circulars or re-enactment thereof;
- “Board” shall mean the Board of Directors of Sanmati Precision Engineering Limited and shall include any Committee thereof authorised for the purpose;
- “Company” shall mean Sanmati Precision Engineering Limited;
- “Committee” means any Committee formed under the delegated authority of the Board;
- “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 the Act.
- “Net worth” means net worth as defined in sub-section (57) of section 2 of the Companies Act, 2013.
- “Paid-up share capital” or “share capital paid-up” means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also include any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called;
- “Regulations” shall mean SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015, including any modifications, amendments, clarifications, circulars or re-enactment thereof;
- “SEBI Regulations” would include all the acts, regulations, circular, notifications etc. issued by the Securities Exchange Board of India from time to time;
- “Stock Exchange” means a recognised stock exchange as defined under clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 on which Equity shares of the Company are listed;
- “Subsidiary” shall mean a company shall be considered as Subsidiary if it falls within the criteria defined under Section 2(87) of the Act;
- “Turnover” as defined under Section 2(91) of the Act means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year.
Words and expressions used and not defined in the Policy shall have the same meanings respectively assigned to them in the Act and / or Regulation
E) DISCLOSURES OF EVENTS AND INFORMATION
The Policy sets forth the guidelines for disclosure of material events or information.
1. Category A – Events or information
Category A refers to such events or information which are deemed to be material events or information without application of materiality test. The indicative list of such events or information is given as Annexure I.
2. Category B – Events or information
Category B refers to such events or information which are proved to be material on the application of the materiality test. For determining materiality of events, the following criteria shall be applied:
- omission of which is likely to result in discontinuity or alteration of event or information already available publicly;
- omission of which is likely to result in significant market reaction if the said omission came to light at a later date; or
- which are in the opinion of Board of Directors or any Committee thereof or any other person authorised for the purpose considered to be material.
The indicative list of such is given as an Annexure II.
However, the list of events / information given in Annexure I & II are indicative and not exhaustive and the necessity or obligation to make the requisite disclosure depends upon magnitude of impact of such events or information and on the facts of each case. Any event or information which is considered material in accordance with the Policy shall also be disclosed even if it is not specially listed in Annexure I or Annexure II of the Policy.
Determination of Materiality: (Materiality test)
Materiality will be determined on a case to case basis depending on nature of the events, specific facts, magnitude of likely impact in case such event is omitted to be disclosed, and thecircumstances relating to the information or event.
To determine whether a particular event orinformation is material in nature, the Company may:
- Either consider the qualitative criteria asdefined under clause 4(2); or
- Quantitative criteria as may be appropriatefor each event listed under Annexure II.
- MATERIALITY THRESHOLD FOR DETERMINATION OF MATERIAL INFORMATION
Keeping in view the principle for determination of materiality of events or information as mentioned above, materiality threshold has been defined as follows for events / information specified in Annexure II as such events or information shall be considered material:
- where the value involved in it exceeds 10% of the gross turnover or revenue or total income or net worth; or
- where the impact of it exceeds 5% of the gross turnover or revenue or total income or net worth.
The above threshold shall be calculated on annualized basis on the basis of audited consolidated financial statements of the last audited financial year.
- GENERAL AUTHORIZATION AND RESPONSIBILITY
The Board of Directors of the Company have authorised the Chairman & Managing Director, the Executive Directors and Company Secretary, who are the authorized persons to determine the materiality of an event or information and to make appropriate disclosure on a timely basis. In order to assist the authorised persons, the Board has further decided that the Chief Financial Officer (CFO) in consultation with the aforesaid Authorised Persons will decide on the materiality of the event/information and on the basis of their guidance/decision, the Authorised Persons would then take a final decision on the disclosure.
The Authorized Persons will then ascertain the materiality of such event(s) or information based on the above guidelines.
On completion of the assessment, the Authorized Persons shall, if required, make appropriate disclosure(s) to the Stock Exchanges.
The Authorised Persons shall take decisions in this regard with consensus, provided however, where consensus cannot be reached in reasonable time, with regard to urgency of the matter, the Chairman & Managing Director shall take the final decision.
- POLICY REVIEW
The Authorized Persons may review the Policy from time to time. Material changes to the Policy will need the approval of the Board of Directors. Should there be any inconsistency between the terms of the Policy and SEBI (LODR) Regulations, the provisions of the SEBI (LODR) Regulations, shall prevail.
Any amendments to the SEBI (LODR) Regulations shall mutatis mutandis be deemed to have been incorporated in this Policy.
As per the provisions of SEBI (LODR) Regulations, the Policy shall be disclosed on the website of the Company. Further, the Company shall disclose on its website all such events or information which has been disclosed to stock exchange(s) under SEBI (LODR) Regulations and such disclosures shall be made available on the website of the Company for a period of five years and thereafter as per the archival policy of the Company.
- The Sexual Harassment at Workplace (Prevention, prohibition and Redressal) Act, 2013
Policy for Prevention of Sexual Harassment
Sanmati Precision Engineering Limited’s quest for competitive excellence consists of our commitment to lawful and ethical conduct and adhering to our company’s values. Integrity, honesty and respect for people remain some of our core values.
Sanmati Precision Engineering Limited (“the Company”) is committed to providing work environment that ensures every employee is treated with dignity and respect and afforded equitable treatment. The Company is also committed to promoting a work environment that is conducive to the professional growth of its employees and encourages equality of opportunity. The Company will not tolerate any form of sexual harassment and is committed to take all necessary steps to ensure that its employees are not subjected to any form of harassment.
The Prevention of Sexual Harassment Policy has been formed to prohibit, prevent or deter the commission of acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment.
The Policy for Prevention of Sexual Harassment was constituted by the Board of Directors at the meeting held on June 01, 2019 in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
This Policy applies to all the employees and trainees (whether in the office premises or outside while on duty) of the Company and all of its group companies in India, where sexual harassment occurs to an employee as a result of an act by a third party or outsider while on official duty, will take all necessary and reasonable steps to assist the affected person in terms of support and preventive action.
What is Sexual Harassment?
Sexual Harassment includes such unwelcome sexually determined behavior, as physical and advances, sexually colored remarks, showing pornography and sexual demands whether by words, gestures or actions. Such conduct can be humiliating and may constitute a health and safety problem. It is discriminatory when the complainant has reasonable grounds to believe that his other objection would disadvantage them in connection with employment, including recruiting or promotion or when it creates a hostile working environment.
Sexual harassment includes such unwelcome sexually determined behavior (whether directly or by implication) as:
(a) Physical contact and advances;
(b) A demand or request for sexual favors;
(c) Sexually colored remarks;
(d) Showing pornography;
(e) Any other unwelcome physical, verbal or non-verbal conduct of sexual nature.
Sexual harassment is emotionally abusive and creates an unhealthy, unproductive atmosphere at the workplace. Sexual harassment cases can be classified into two categories – quid pro quo and creation of a hostile working environment.
(a) Under the quid pro quo (meaning this for that) form of harassment, a person or authority, usually the superior of the victim, demands sexual favors for getting or keeping a job benefit and threatens to fire the employee if the conditions are not met.
(b) A hostile work environment arises when a co-worker or supervisor creates a work environment through verbal or physical conduct that interferes with another co-worker’s job performance or creates the workplace atmosphere which is intimidating, hostile, offensive or humiliating and experienced as an attack on personal dignity. For example an employee tells offensive jokes. No person shall indulge or caused to be indulged under instructions from superior in sexual harassment of co-workers.
However, an employee who is sexually harassed can complain about the same even if there is no adverse job consequence.
Responsibilities regarding Sexual Harassment:
All employees of the Company have a personal responsibility to ensure that their behavior is not contrary to this policy. All employees are encouraged to reinforce the maintenance of a work environment free from sexual harassment.
An appropriate complaint mechanism in the form of “Complaints Committee” has been created in the Company for time – bound redressal of the complaint made by the victim.
Internal Complaints Committee (ICC):
The “Internal Complaints Committee” shall consist of a Chairperson, Secretary and 3 other members. A woman employed at the senior level shall be the Chairperson. Not less than two members should, preferably be committed to the cause of women or have had experience in social work. One of the Committee members shall be a woman from a reputed NGO/ legal body / any other social work body familiar with the issues of sexual harassment. The tenure of the committee shall be not exceeding 3 years & names of the committee members shall be announced by the HR Manager. The Executive Director shall be the authority for disciplinary actions on issues relating to sexual harassment at the workplace.
Dealing with the Complaint:
Given that this policy highlights a preventive focus, there is a need to distinguish between an informal and formal process.
PROCEDURE FOR INFORMAL GRIEVANCE REDRESSAL:
Informal processes normally involve an intermediary means for resolving a problem. In the case of Sexual Harassment, at first instance, the person (i.e. HOD/ HR / Woman representative of the location) may be the point of first contact for anyone seeking informal support/intervention to stop unwelcome behavior.
A sense of restraint and responsibility on the part of all concerned is critical for the effective functioning of these guidelines. The preventive / informal process that can be adopted is as follows:
- Convey to the person who is the cause of distress, about what that person’s actions, words, behavior is doing and convey in no uncertain terms that such behavior is not appreciated. What is important is the “Way” a particular behavior, action or word is perceived; “Intent” is of no consequence.
- The second step would be to approach someone within the company – preferably your Superior or HR Representative. The Superior or HR Representative would then try and counsel / talk it over with a view towards closing the matter amicably.
- In any case all such incidents along with the resolution, needs to be reported to the Head of HR who will then provide a short report to the Internal Complaints Committee and the matter will be closed.
- However, in the event of it not being resolved, then it would need to be escalated to the Internal Complaints Committee.
PROCEDURE FOR FORMAL GRIEVANCE REDRESSAL:
In the event of the complaint not being resolved through informal mechanism, then it would need to be escalated to the Internal Complaint Committee for redressal.
- It is the obligation of all employees to report sexual harassment experienced by them personally. A concerned co-worker may also inform the Complaints Committee of any instance or behavior of sexual harassment by a co-worker towards another employee.
- The concerned employee shall give his complaint in writing to any of the committee member giving details of the incident within a week of its occurrence.
- Once the complaint is received, it will be kept strictly confidential.
- The person accused will be informed that a complaint has been filed against him/her and no unfair acts of retaliation or unethical action will be tolerated. The Committee shall ensure that a fair and just investigation is undertaken immediately.
- Both the complainant and the alleged accused initially will be questioned separately with a view to ascertain the veracity of their contentions. If required, the person who has been named as a witness will need to provide the necessary information to assist in resolving the matter satisfactorily.
- The Chairperson after studying the report & discussion with the Committee members shall submit her recommendation to the Executive Director within 10 days of completing the inquiry.
- The complainant and the accused shall be informed of the outcome of the investigation. The investigation shall be completed within 3 months of the receipt of the complaint. If the investigation reveals that the complainant has been sexually harassed as claimed, the accused will be disciplined accordingly. The implementation of the recommendation of Internal Complaint Committee by Executive Director should be done within 30 days of receipt of such recommendation.
Where any misconduct is found by the Committee, appropriate disciplinary action shall be taken against the accused.
Disciplinary action may include transfer, withholding promotion, suspension or even dismissal. This action shall be in addition to any legal recourse sought by the complainant.
All information received shall be kept confidential. Any person (including witnesses) who breaches confidentiality shall be subject to disciplinary action.
Protection to Complainant / Victim:
The Company is committed to ensuring that no employee who brings forward a harassment concern is subject to any form of reprisal. Any reprisal will be subject to disciplinary action. The Company will ensure that the victim or witnesses are not victimized or discriminated against while dealing with complaints of sexual harassment. However, anyone who abuses the procedure (for example, by maliciously putting an allegation knowing it to be untrue) will be subject to disciplinary action.
In conclusion, the Company reiterates its commitment to providing its employees, a workplace free from harassment/ discrimination and where every employee is treated with dignity and respect.
- CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING
- PREAMBLE & OBJECT
To comply with the provisions of Securities and Exchange Board of India (Prohibition of Insider Trading), Regulations, 2015 the Company has formulated code of conduct for prevention of insider trading (“the Code”). The said Regulations prohibit an insider from trading in the securities of the company listed on the stock exchange(s) on the basis of Unpublished Price Sensitive Information.
Accordingly, the Board of Directors of the Company on June 01, 2019 has adopted the Code of Conduct for prevention of Insider Trading.
- The Code is made to regulate, monitor and report the trading by the Insider.
- The Code has been made pursuant to Regulation 9 of the Securities and Exchange Board of India (SEBI) (Prohibition of Insider Trading) Regulations, 2015 which would be effective from May 15, 2015.
- Definitions: For the purpose of this Code –
- “Act” means the Securities and Exchange Board of India Act, 1992 and any amendments thereto;
- “Board” means the Securities and Exchange Board of India;
- “Board of Directors” means the Board of Directors of Sanmati Precision Engineering Limited;
- “Code” or “Code of Conduct” shall mean the Code of Internal Procedures and Conduct Regulating, Monitoring and Reporting of trading by insiders of Sanmati Precision Engineering Limited as amended from time to time;
- “Company” means Sanmati Precision Engineering Limited;
- “Companies Act” means the Companies Act, 2013 & Rules made there under and any amendments thereto;
- “Compliance Officer” means any senior officer, designated so and reporting to the board of directors or head of the organization in case board is not there, who is financially Literate and is capable of appreciating requirements for legal and regulatory compliance under these regulations and who shall be responsible for compliance of policies, procedures, maintenance of records, monitoring adherence to the rules for the preservation of unpublished price sensitive information, monitoring of trades and the implementation of the codes specified in these regulations under the overall supervision of the board of directors of the listed company or the head of an organization, as the case may be;
- “Connected Person” means:
- any person who is or has during six months prior to the concerned act been associated with the Company, directly or indirectly, in any capacity including by reason of frequent communication with its officers or by being in any contractual, fiduciary or employment relationship or by being a director, officer or any employees of the Company or holds any position including professional or business relationship between himself and the Company whether temporary or permanent, that allows such person, directly or indirectly, access to unpublished price sensitive information or is reasonably expected to allow such access;
- Without prejudice to the generality of the forgoing, the persons falling within the following categories shall be deemed to be connected persons unless the contrary is established;
- an immediate relative of connected persons specified in clause (i) or holding company or associate company or subsidiary company; or
- an intermediary as specified in Section 12 of the Act or an employee or directors thereof; or
- an investment company, trustee company, assets management company or an employee or director thereof; or
- an official of a stock exchange or of clearing house or corporation; or
- a member of board of trustees of a mutual fund or a member of the board of directors of the assets management company of a mutual fund or is an employee thereof; or
- a member of the board of directors or an employee, of a public financial institution as defined in section 2(72) of the Companies Act, 2013; or
- an official or an employee of a self- regulatory organization recognized or authorized by the Board; or
- a banker of the Company; or
- a concern, firm, trust, Hindu undivided Family, company or association of persons wherein a director of the Company or his immediate relative or banker of the Company, has more than ten percent, of the holding or interest;
- “Designated Employees” means all employees who are Manager and above and such other employee who may be so designated from time to time by the Chairman and Managing Director for the purpose of this Code;
- “Designated Person” means Directors, Key Managerial Personnel and designated employees of the Company;
- “Generally available information” means information that is accessible to the public on a non-discriminatory basis;
- “Insider” means any person who is a connected person; or in possession of or having access to unpublished price sensitive information;
- “Immediate relative” means a spouse of a person, and include parents, sibling, and child of such person or of the spouse, any of whom is either dependent financially on such person, or consults such person in taking decisions relating to trading in securities of the Company;
- “Promoter” shall have the meaning assigned to it under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 or any modification thereof;
- “Relatives” means a person, as defined in Section 2(77) of the Companies Act, 2013 and any amendments thereto;
- “Regulations” means the SEBI (Prohibition of Insider Trading) Regulations, 2015 and any amendments thereto;
- “Stock Exchange” means a stock exchange which is recognized of the Central Government or SEBI under Section of Securities Contracts (Regulation) Act, 1956 and any amendments thereto;
- “Securities” shall have the meaning assigned to it under the Securities Contracts (Regulations) Act, 1956 (42 of 1956) or any modification thereof except units of a mutual fund;
- “Specified” means specified by SEBI in writing;
- “Takeover Regulations” means SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and any amendments thereto;
- “Trading” means and includes subscribing, buying, selling, dealing, or agreeing to subscribe, buy, sell, deal in any securities, and “trade” shall be construed accordingly;
- “Trading Day” means a day on which recognized Sock Exchanges are open for trading;
- “Trading Window” means a trading period for trading in Company’s Securities as specified by the Company from time to time;
- “Unpublished Price Sensitive Information” means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to following:-
- Financial Results;
- Change in capital structure;
- Mergers, de-mergers, acquisitions, delisting, disposals and expansion of business and such other transactions;
- Changes in Key Managerial Personnel; and
- Material events in accordance with the listing agreement with the Sock Exchange
All other words and phrases not defined in this Code will have the meaning as defined in the SEBI Act, 1992, Securities Contracts (Regulations) Act, 1956, The Depositories Act, 1996 or The Companies Act, 2013 and Rules and Regulations made there under and any amendment thereto.
- Applicability of the Code: This Code will be applicable to the insider as defined in the Clause 3(l) of this Code of Conduct.
PART – II
RESTRICTIONS ON COMMUNICATION AND TRADING BY INSIDERS
- Communication or procurement of unpublished price sensitive information:
- No Insider shall communicate, provide, or allow access to any Unpublished Price Sensitive Information, relating to the company or securities listed or proposed to be listed, to any person including other Insiders except where such communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.
- No person shall procure from or cause the communication by any Insider of Unpublished Price Sensitive Information, relating to the company or securities listed or proposed to be listed, except in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.
- Notwithstanding anything contained in this regulation, Unpublished Price Sensitive Information may be communicated, provided, allowed access to or procured, in connection with a transaction pursuant to Regulation 3 of the Regulations.
- Trading when in possession of unpublished price sensitive information:
No Insider shall trade in the equity shares of the Company when in possession of Unpublished Price Sensitive Information except as allowed under the Regulation 4(1) of the Regulations.
- Trading Plans:
- An Insider shall be entitled to formulate a trading plan (“Trading Plan“) pursuant to Regulation 5(2) of the Regulations and present it to the Compliance Officer for approval and public disclosure pursuant to which trades may be carried out on his behalf in accordance with such plan. No Insider shall apply to the Compliance Officer for pre-clearance of Trading Plans during the closure of the Trading Window. No Insider shall execute contra-trade during the period of the Trading Plan which has been approved by the Compliance Officer of the Company.
- The Compliance Officer shall review the Trading Plan to assess whether the plan would have any potential for violation of these regulations and shall be entitled to seek such express undertakings as may be necessary to enable such assessment and to approve and monitor the implementation of the Trading Plan.
- The Trading Plan once approved shall be irrevocable and the Insider shall mandatorily have to implement the plan pursuant to Regulation 5(4) of the Regulations without being entitled to either deviate from it or to execute any trade in the securities outside the scope of the Trading Plan.
- Upon approval of the Trading Plan, the Compliance Officer shall notify the plan to the Stock Exchanges on which the securities are listed.
DISCLOSURES OF TRADING BY INSIDERS
- General Provisions:
- Every public disclosure under this part shall be made in such form as may be specified.
- The disclosures to be made by any person under this Part shall include those relating to Trading by such person’s immediate relatives, and by any other person for whom such person takes Trading decisions.
- The disclosures of Trading in securities shall also include Trading in derivatives of securities and the traded value of the derivatives shall be taken into account for purposes of this part:
Provided that trading in derivatives of securities is permitted by any law for the time being in force.
- The disclosures made under this part shall be maintained by the Company, for a minimum period of five years, in such form as may be specified.
- Disclosures by certain persons:
- Initial Disclosures:
- Every Promoter, Key Managerial Personnel, Director and Designated Employee of the Company shall disclose his equity shareholding in the Company as on date of this Code taking effect to the Company within thirty days of this Code taking effect in Form No. “A”.
- Every person on appointment as a Key Managerial Personnel or a Director of the Company or upon becoming a Promoter shall disclose his equity shareholding in the Company as on the date of the appointment or becoming a Promoter, to the Compliance Officer within seven days of such appointment or becoming a Promoter in Form No. “B”.
- Continual Disclosures:
- Every Promoter, Employee and Director of the Company shall disclose to the Compliance Officer in Form No. “C” the number of equity shares acquired or disposed of within two Trading days of such transaction, if the value of the equity shares traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of Rs. Ten Lakhs or such other value as may be specified;
- The Company shall notify the particulars of such Trading to stock exchange(s) within two trading days of receipt of the disclosure or from becoming aware of such information.
- Disclosures by other connected persons:
The other Connected Persons to whom this Code is applicable is holding equity shares of the Company, shall disclose their shareholding within 30 days from the date of this Code taking effect in Form No. “D” and Trading made by them within 7 days in Form No “E” if the value of the equity shares traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of Rs. Ten Lakhs or such other value as may be specified.
- Compliance of the Trading Restrictions: Every Promoter, Key Managerial Personnel, Director and Designated Employee of the Company shall be subject to Trading restrictions in the following manner:-
- The Trading window: The Trading Window will be closed before 7 days of the happening of the following events and shall remain closed upto 48 hours after the publication of the price sensitivity information i.e.
- Declaration of financial results (Quarterly, Half Yearly &Annual)
- Declaration of dividends ( Interim & Final)
- Issue of securities by way of Public/ Rights /Bonus etc.
- Any major expansion plan or execution of new project
- Amalgamation, Mergers, takeovers or any buy back.
- Disposal of the whole or substantially the whole of the undertaking.
- Any major change in policies, plans or operation of the Company
- Restriction on Trading during the Closure of Trading Window:
Every Promoter, Key Managerial Personnel, Director and Designated Employee of the Company shall not deal in the equity shares of the Company during the Closure of the Trading Window.
- Pre-clearance of Trades:
All Specified Persons, who intend to deal in the securities of the Company when the trading window is open and if the value of the proposed trades is in excess of Ten Lakhs, should pre-clear the transaction. However, no designated person shall be entitled to apply for pre-clearance of any proposed trade if such designated person is in possession of unpublished price sensitive information even if the trading window is not closed and hence he shall not be allowed to trade. The pre-dealing procedure shall be hereunder:
- An application may be made in the prescribed Form (Form No. “F”) to the Compliance officer indicating the estimated number of securities that the Specified Person intends to deal in, the details as to the depository with which he has a security account, the details as to the securities in such depository mode and such other details as may be required by any rule made by the Company in this behalf.
- An undertaking shall be executed in favour of the Company by such Specified Person incorporating, inter alia, the following clauses, as may be applicable:
- That the employee/director/officer does not have any access or has not received “Price Sensitive Information” up to the time of signing the undertaking.
- That in case the Specified Employee has access to or receives “Price Sensitive Information” after the signing of the undertaking but before the execution of the transaction he/she shall inform the Compliance Officer of the change in his position and that he/she would completely refrain from dealing in the securities of the Company till the time such information becomes public.
- That he/she has not contravened the code of conduct for prevention of insider trading as notified by the Company from time to time.
- That he/she has made a full and true disclosure in the matter
- All Specified Persons shall execute their order in respect of securities of the Company within one week after the approval of pre-clearance is given. The Specified Person shall file within 2 (two) days of the execution of the deal, the details of such deal with the Compliance Officer in the prescribed forms. In case the transaction is not undertaken, a report to that effect shall be filed. For the sake of clarity, the term “days” mentioned in this clause shall be deemed to be read as “Trading Days”.
- If the order is not executed within seven days after the approval is given, the employee/director must pre-clear the transaction again.
- All Specified Persons who buy or sell any number of securities of the Company shall not execute a contra trade i.e. sell or buy any number of securities during the next six months following the prior transaction. All Specified Persons shall also not take positions in derivative transactions in the securities of the Company at any time. In case of any contra trade be executed, inadvertently or otherwise, in violation of such a restriction, the profits from such trade shall be liable to be disgorged for remittance to the Securities and Exchange Board of India (SEBI) for credit to the Investor Protection and Education Fund administered by SEBI under the Act.
In case of subscription in the primary market (initial public offers), the above mentioned entities shall hold their investments for a minimum period of 30 days. The holding period would commence when the securities are actually allotted.
- The Compliance Officer may waive off the holding period in case of sale of securities in personal emergency after recording reasons for the same. However, no such sale will be permitted when the Trading window is closed.
- Violation of the Code:
- Every Promoter, Key Managerial Personnel, Director and Designated Employee of the Company and the persons deemed to be Connected Persons as per this Code who violates any of the provisions of this Code will be penalized and appropriate action will be taken against them by the Company after giving reasonable opportunity to them to show cause. They shall also be subject to disciplinary action including wage freeze, suspension, in-eligibility for future participation in E.S.O.P. etc.
- If the Insider deals in the equity shares of the Company, violating the Code, the Compliance Officer will confidentially maintain the list of the same.
- In addition to the action which may be taken by the Company, the persons violating this Code will also be subject to any penal action by SEBI as per SEBI Act and the Company shall inform the same to the SEBI promptly.
The Compliance Officer of the Company shall report to the Board of Directors and the Chairman of the Audit Committee of the Company about the compliance of the Code on quarterly basis.