Corporate Governance Policy

  1. INTRODUCTION

Annapurna firmly believes in and has consistently endeavoured to practice good corporate governance. It follows a sound governance process consists of a combination of transparent business practices, which enhance shareholders value and enables the company to fulfil its obligations to customers, employees, financiers and to the society in general. The company further believes that, such practices are founded upon the core values of transparency, empowerment, accountability, independent monitoring and environment consciousness. The company makes its best endeavour to uphold and nurture these core values across all aspects of its operations.

  1. CONTEXT AND OBJECTIVES

As per the Non-Banking Financial Companies– Corporate Governance (Reserve Bank) Directions, 2015 every non-deposit accepting Non-Banking Financial Company with asset size of Rs.500 crores and above (NBFCs-ND-SI), as per its last audited balance sheet should frame internal guidelines on corporate governance with the approval of the Board of Directors, enhancing the scope of the guidelines without sacrificing the spirit underlying the Directions and it shall be published on the company’s website, if any, for the information of various stakeholders Annapurna Finance Private Limited (“Company”) being an NBFC–ND-SI,

  1. BOARD OF DIRECTORS

The Board shall be responsible for exercising its business judgments to act in, what it reasonably believes to be in the best interests of the Company and its shareholders. The Board of Directors along with its constituted Committees shall provide direction and guidance for the Company and shall further supervise and review the performance of the Company.

As the Directors occupy fiduciary position, they shall attend and actively participate in Board and its Committee meetings thereof, on which they serve, and shall properly discharge their responsibilities.

The Board shall be responsible for overall compliance with the Corporate Governance of the Company and oversee the business affairs including responsibility for the Company’s business strategy and financial soundness, key personnel decisions, internal organisation and governance structure and practices, Risk Management and compliance obligations and in doing so the Board must act honestly, in good faith and in the best interest of the Company.

The Board should ensure that the Company’s organisational structure enables the Board and Senior Management to carry out their responsibilities and facilitates effective decision making and good governance. This includes clearly laying out the key responsibilities and authorities of the Board itself, the Senior Management and of those responsible for the control functions.

The Board should actively engage in the major matters of the Company and keep up with material changes in the Company’s business and the external environment as well as act in timely manner to protect the long-term interests of the Company.

The Board should ensure that transactions with related parties are reviewed to assess risk and are subject to appropriate resolutions/approval, as required under various applicable laws and that corporate or business resources of the Company are not misappropriated or misapplied.

The Board should review this Policy periodically so that it remains appropriate in the light of material changes in regulatory requirement with respect to the Company’s size, complexity, geographic reach, business strategy, market and best governance practices.

  1. CORPORATE CULTURE AND VALUES
    In order to promote sound corporate culture and values, the Board should ensure the following:

    • setting and adhering to corporate values for itself, Senior Management and other employees that create expectations that all business should be conducted in a legal and ethical manner;
    • promoting risk awareness within a strong risk culture, conveying the Board’s expectation that it does not support excessive risk-taking and that all employees are responsible for helping to ensure that the Company operates within the agreed risk appetite and risk limits;
    • ensuring that appropriate steps are taken to communicate throughout the Company, the corporate values, professional standards or Code of Conduct it sets, together with supporting policies;
    • employees should be encouraged and able to communicate confidentially and without the risk of victimization, legitimate concerns about illegal, unethical or questionable practices.
  2. OVERSIGHT OF SENIOR MANAGEMENT
    The Board should delegate proper authority to the Executive Directors who are responsible for the day to day affairs of the Company to oversee the Senior Management who should hold position of Senior Management accountable for their actions and enumerate the consequences if those actions are not aligned with the Board’s performance and expectations. This includes adhering to the Company’s values, risk appetite and risk culture, regardless of financial gain or loss to the Company. In doing so, the Board should through the Executive Directors:

    • monitor that Senior Management’s actions are consistent with the strategies and policies approved by the Board;
    • meet regularly with Senior Management;
    • interrogate and critically review and reply on the information provided by Senior Management;
    • ensure that Senior Management’s knowledge and expertise remain appropriate, given the nature of the business and the Company’s risk profile;
    • ensure that appropriate succession plans are in place for Senior Management positions.
  3. SIZE OF THE BOARD
    The Board’s strength shall be as per the limits specified in the Companies Act, 2013 and the Articles of Association of the Company.
  4. BOARD COMPOSITION
    The Board shall have an optimum combination of Executive, Non-executive and Independent Directors in line with the requirements of the provisions of the Companies Act, 2013 and other Applicable Laws and the Articles of Association of the Company.
  5. BOARD MEETINGS AND QUORUM
    The Board Meetings of the Company shall be held as per the requirements prescribed under the Companies Act, 2013, other Applicable Laws, Articles of Association and as decided by the Board of Directors. The meetings of the Board shall generally be held at the Company’s Head office unless otherwise decided by the Board of Directors. The dates of the meetings shall be fixed well in advance. The quorum shall be as per the requirements of the Companies Act, 2013, other Applicable Laws and Articles of Association of the Company.

    Important decisions of the Board may also be taken through Circular Resolution in compliance with the provisions of the Companies Act, 2013.

  6. INFORMATION TO BE PLACED BEFORE BOARD AND ITS COMMITTEES
    To enable the Board members to discharge their responsibilities effectively and to take informed decisions, detailed agenda papers with explanations on each item, shall be sent to each Director well in advance as per Companies Act, 2013, other Applicable Laws and Articles of Association of the Company. All the items on the agenda shall be discussed in detail, during the Board and its Committee meetings. The Board members shall have complete access to any information, within the Company. At the meetings, the Board members shall be provided with all the relevant information on important matters affecting the working of the Company as well as the related details that require deliberation by the members of the Board.
  7. AGENDA FOR THE MEETING
    The agenda for the Board and its Committee meetings shall be sent to the Board members and the Committee members respectively within a reasonable period of time prior to the Meeting as per Companies Act, 2013 and other Applicable Laws. Each Board member and Committee member as the case may be is free to suggest inclusion of items in the agenda. With the permission of the Chair, each Board member and Committee member as the case may be is free to raise any matter(s) that is/are not on the agenda of the Board and the Committee Meeting respectively and any other matter can be placed for discussion.
  8. ATTENDANCE AT BOARD MEETINGS
    The Directors shall strive to attend all meetings of the Board and its Committees where they are members. In case a Director is unable to attend specific Board Meeting or its Committees where they are members, he or she shall obtain leave of absence from the Board or the Committee as the case may be. The company shall also provide video conferencing facility to members to the meetings.
  9. MINUTES
    The minutes of all meetings of the Board and the Committees shall be circulated to the Board and the Committee members respectively and shall be noted in the consequent Board Meeting and Committee meetings respectively as per Companies Act, 2013 and other Applicable Laws. Minutes of meetings of Committees of Board shall also be placed before the Board.
  1. BOARD COMMITTES AND MANAGEMENT LEVEL COMMITTES

In order to focus on the critical functions of the Company, the Board may constitute such Committees as and when required to ensure smooth functioning of the Company. The Board shall have the following Committees mandatorily:

  • Audit Committee
  • Risk Management Committee
  • Nomination and Remuneration Committee
  • CSR & SPM Committee
  • Product Committee
  • Executive Committee
  • IT Strategy Committee

The terms of reference of the above mentioned Committees shall be determined by the Board from time to time as per Companies Act, 2013 and other Applicable Laws.

In addition to the above sub committees of Board, the Company shall have the following committees at management level, to assist Board and Sub committees.

  • ALM Committee
  • Risk Committee (management level)
  • Women empowerment Committee.

The Committees may engage in any manner, from time to time such experts as the Committees may decide for effective discharge of the Roles and Responsibilities of such Committees.

  1. FIT AND PROPER CRITERIA FOR DIRECTORS

The Company shall have a policy put in place for ascertaining the ‘fit and proper’ criteria at the time of appointment of Directors and on a continuing basis. The Nomination & compensation Committee shall review the appointment/re-appointment of Directors considering their qualifications, expertise, track record, integrity and other ‘fit and proper’ criteria. The Nomination & compensation Committee should obtain such declarations/undertakings, deed of covenant from the Directors and ensure furnishing such statement and certificates as may be prescribed for determining Fit and Proper Criteria in line with the Guidelines issued by the RBI for the time being in force.

  1. DISCLOSURES IN THE FINANCIAL STATMENTS

In addition to the disclosures required to be made as per the Applicable Laws, the following additional disclosures shall be made in the annual financial statements in terms of the RBI Directions:

  • registration / licence / authorisation by whatever name called, obtained from other financial sector regulators;
  • ratings assigned by credit rating agencies and migration of ratings during the year;
  • penalties, if any, levied by any regulator;
  • information namely, area, country of operation and joint venture partners with regard to joint ventures and overseas subsidiaries; and
  • asset-liability profile, Non-Performing Assets (NPA) and movement of NPAs, details of all off-balance sheet exposures, structured products issued by them as also securitization/ assignment transactions and other disclosures.

Requisite disclosures as may be required under any Applicable Laws from time to time shall also be disclosed in the Financial Statements.

  1. MINIMUM INFORMATION TO BE PLACED BEFORE THE BOARD
  • Annual operating plans and budgets and any updates.
  • Capital budgets and any updates.
  • Quarterly results for the company and its operating divisions or business segments.
  • Minutes of meetings of audit committee and other committees of the board of directors.
  • The information on recruitment and remuneration of senior officers, one level below the board of directors, including appointment or removal of Chief Financial Officer and the Company Secretary.
  • Show cause, demand, prosecution notices and penalty notices, which are materially important.
  • Fatal or serious accidents, occurrence of dangerous incidents, any material effluent or pollution problems.
  • Any material default in financial obligations to and by the company, or substantial non-payment for goods sold by the company.
  • Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the company or taken an adverse view regarding another enterprise that may have negative implications on the listed entity.
  • Details of any joint venture or collaboration agreement.
  • Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.
  • Significant labour problems and their proposed solutions. Any significant development in Human Resources/ Industrial Relations front like signing of wage agreement, implementation of Voluntary Retirement Scheme etc.
  • Sale of investments, subsidiaries, assets which are material in nature and not in normal course of business.
  • Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.
  • Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.
  • The progress made in putting in place a progressive risk management system and risk management policy and strategy followed by the Company;
  • Conformity with corporate governance standards viz., in composition of various committees, their role and functions, periodicity of the meetings and compliance with coverage and review functions, etc.
  1. APPOINTMENT AND ROTATION OF STATUTORY AUDITORS

Subject to the provisions contained in the Companies Act, 2013, the Auditors of the Company shall be appointed with the approval of the Shareholders at the Annual General Meeting as recommended by the Board of Directors of the Company based on the recommendation of the Audit Committee of the Company. The Auditors can be appointed for a period of 5 years and such appointment shall be ratified by the shareholders every year at the Annual General Meeting. Auditors can be appointed for a two consecutive term of 5 years.

The Company shall also comply with the RBI guidelines and provisions of the Companies Act, 2013 regarding rotation of partners of the Firm conducting Statutory Audit from time to time. As contained in the Directions, presently the Company is required to rotate the partner of the Chartered Accountant firm conducting the audit, every three years, so that same partner does not conduct audit of the company continuously for more than a period of three years.

However, the partner so rotated will be eligible for conducting the audit of the company after an interval of three years, subject to approval of the shareholders and recommendations of the Board and Audit Committee of the Company. The Company shall also incorporate appropriate terms in the letter of appointment of the firm of auditors and ensure its compliance.