Auxilo Finserve Private Limited (Auxilo) is a private limited company which enjoys the privileges/exemptions under the Companies Act, 2013 as compared to the public limited and the listed companies. However, the Company's endeavour is to ensure utmost corporate governance and hence with this objective in mind, the company's promoters have requested corporate governance experts and dignataries to join the company's Board as the Independent Directors of the Company.
Following the principles and mandates laid down under the Companies Act, 2013, Auxilo's shareholders have appointed independent directors on its Board. The terms & conditions of appointment of Independent Director, hence, shall be as provided under the Companies Act, 2013 and Rules made there under.
Applicable provisions of the Companies Act, 2013 (Act)
- Section 166 of the Act provides for the Duties of Directors of a Company
- Schedule IV of the Act lays down the Code of conduct for the Independent Directors to follow.
The same has been laid down as the terms & conditions to be followed by the Independent Directors of Auxilo Finserve Private Limited.
Extract of the Act in relation to the above provisions is available herewith under Annexure A which in toto lays down the terms and conditions of the appointment of Independent Directors.
The independent Directors shall submit requisite disclosures to the Board of Directors confirming their independence and qualification to act as the Independent Director of the Company. They shall as per the relevant provisions of the Act disclose their association with the other entities.
The Company will be paying the sitting fees to the Independent Directors for attending and contributing to the Committee meetings and Board meetings which shall be subject to the limits set under the applicable laws.
EXTRACTS OF THE RELEVANT PROVISIONS OF THE COMPANIES ACT, 2013
SECTION 166 - DUTIES OF DIRECTORS
- Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of the company.
- A director of a company shall 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, the shareholders, the community and for the protection of environment.
- A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
- A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
- A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.
- A director of a company shall not assign his office and any assignment so made shall be void.
- If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
SCHEDULE – IV – CODE FOR INDEPENDENT DIRECTORS
The Code is a guide to professional conduct for independent directors. Adherence to these standards by independent directors and fulfillment of their responsibilities in a professional and faithful manner will promote confidence of the investment community, particularly minority shareholders, regulators and companies in the institution of independent directors.
I. 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;
- Assist the company in implementing the best corporate governance practices.
II. 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;
- Scrutinise 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;
- Moderate and arbitrate in the interest of the company as a whole, in situations of conflict between management and shareholder's interest.
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 of Directors and of the Board committees 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 the same 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 behaviour, 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;
- 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.
IV. Manner of appointment:
- Appointment process of independent directors shall be independent of the company management; while selecting independent directors the Board shall ensure that there is appropriate balance of skills, experience and knowledge in the Board so as to enable the Board to discharge its functions and duties effectively.
- The appointment of independent director(s) of the company shall be approved at the meeting of the shareholders.
- The explanatory statement attached to the notice of the meeting for approving the appointment of independent director shall include a statement that in the opinion of the Board, the independent director proposed to be appointed fulfils the conditions specified in the Act and the rules made thereunder and that the proposed director is independent of the management.
- The appointment of independent directors shall be formalised through a letter of appointment, which shall set out:
- The term of appointment;
- The expectation of the Board from the appointed director; the Board-level committee(s) in which the director is expected to serve and its tasks;
- The fiduciary duties that come with such an appointment along with accompanying liabilities;
- Provision for Directors and Officers (D and O) insurance, if any;
- The Code of Business Ethics that the company expects its directors and employees to follow;
- The list of actions that a director should not do while functioning as such in the company; and
- The remuneration, mentioning periodic fees, reimbursement of expenses for participation in the Boards and other meetings and profit related commission, if any.
- The terms and conditions of appointment of independent directors shall be open for inspection at the registered office of the company by any member during normal business hours.
- The terms and conditions of appointment of independent directors shall also be posted on the company's website.
The re-appointment of independent director shall be on the basis of report of performance evaluation.
VI. Resignation or removal:
- The resignation or removal of an independent director shall be in the same manner as is provided in sections 168 and 169 of the Act.
- An independent director who resigns or is removed from the Board of the company shall be replaced by a new independent director within a period of not more than one hundred and eighty days from the date of such resignation or removal, as the case may be.
- Where the company fulfils the requirement of independent directors in its Board even without filling the vacancy created by such resignation or removal, as the case may be, the requirement of replacement by a new independent director shall not apply.
VII. 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.
VIII. Evaluation mechanism:
- The performance evaluation of independent directors shall be done by the entire Board of Directors, 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.
1. THE POLICY
The Nomination and Remuneration Committee [pursuant to the provisions of the Companies Act, 2013] recommended draft “Remuneration Policy” received the Board approval on 23rd January, 2019.
It lays down provisions relating to remuneration payable to the Directors, Key Managerial Personnel, Senior Management and all the other employees of the company
The Policy aims to establish remuneration system to attract, retain, reward and motivate the best talent in the industry it operates.
The Policy lays down the company’s commitment to
- Establish the remuneration system driven by the strategic objectives of the company
- Establish remuneration practices strengthened by the principles of meritocracy and fairness.
- Ensure the relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
The standards so set shall be the guidelines for the Committee, Company’s management and Human Resources Department to follow in its recruitment process.
2. SCOPE AND COVERAGE
The Policy covers the following in the subsequent sections:
- Criteria to appoint a person as a director or personnel in the senior management
- Criteria for determining qualifications, positive attributes and independence of director
- Guiding principles for the Remuneration payable to Directors, Key Managerial Personnel, Senior Management and other employees of the company
- Evaluation mechanism of the Board, Committees and directors
3. DEFINITIONS AND INTERPRETATION
Unless the context otherwise requires, words and expressions used in the policy and not defined herein but defined in the Companies Act, 2013 as may be amended from time to time shall have the meaning assigned to them therein.
3.1.1. “Board” shall mean the Board of Directors of the Company;
3.1.2. “Committee” shall mean Nomination and Remuneration Committee as constituted and reconstituted by the Board of Directors of the Company in accordance with the company law and applicable provisions.
3.1.3. “Company” shall mean Auxilo Finserve Private Limited;
3.1.4. “Company Law” means the Companies Act, 2013 and rules thereunder;
3.1.5. “Independent Director” shall mean the Director referred to in section 149 of the Companies Act, 2013
3.1.6. “Senior Management” shall mean Senior Management means Personnel of the company who are members of its core management team excluding Board of Directors comprising all members of management one level below the executive directors, including the functional heads.
3.1.7. “Key Managerial Personnel” shall mean the following:
- the Chief Executive Officer or the Managing Director or the Manager;
- the Whole-time director;
- the Chief Financial Officer;
- the Company secretary;
4. CRITERIA FOR APPOINTMENT AS A DIRECTOR OR A PERSONNEL IN THE SENIOR MANAGEMENT
The Committee shall identify persons who are qualified to be appointed as the Directors of the Company or who may be appointed in the Senior Management of the company and recommend to the Board their appointment and removal.
The Committee shall recommend only upon the ascertainment of the credentials of the person such as the educational qualifications, experience and expertise for the position being considered.
The Committee shall be guided by the following criteria:
- The Person to be appointed as Director, Key Managerial Personnel (in accordance with the provisions of the Company Law) or a personnel at the Senior Management Level should possess the qualifications, expertise and experience requisite to the position he/she is considered for appointment. The committee shall exercise due diligence and be guided by the prudence to decide whether the qualification, expertise and experience possessed by a person is adequate for the concerned position.
- The Committee while identifying a person for the position of a Director may be guided by the fact that the company seeks the guidance, insights and directions from the Directors derived from their vast experience while having them on its Board. The Board members’ review, advice and expertize helps the company in sound decision making. Their experience, expertize and foresight stands as a great asset to the company, besides the honour that their association bestows upon the Company.
- The Committee shall ascertain the integrity, the qualifications and the experience in the industry for the position of the Executive/Whole-time Directors/Key Management Personnel and Personnel at Senior Management Level. These positions shall be on a full time basis devoting all the professional time of the Personnel to the Company.
- The tenure, appointment and the reappointment of all the positions shall be subject to the applicable provisions of the Company Law and to the Board approved Human Resources Policies of the Company. Retirement/Removal
- Due to any reason for any disqualification mentioned in the Companies Act, 2013, rules made thereunder or under any other applicable Act, rules and regulations, the committee may recommend, to the board with reasons recorded in writing, removal of a Director or Key Managerial Personnel subject to the provision and the compliances of the said Act, rules and regulations.
- The Whole-time Director, Key Managerial Personnel and Senior Management Personnel shall retire as per the applicable provisions of the Companies Act, 2013 and the prevailing Human Resource policies of the company. The Board will have the discretion to retain the Whole-time Director, Key Managerial Personnel and Senior Management Personnel in the same Position / Remuneration or otherwise, even after attaining the retirement age, for the benefit of the Company. Remuneration
- The Remuneration / Compensation / Commission etc., to the Executive Directors shall be determined by the Committee and recommended to the Board for approval at the time of appointment.
5. CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF DIRECTOR
The Committee shall identify persons who are qualified to be appointed as Independent Directors of the Company and recommend to the Board their appointment.
The Committee shall recommend only upon the ascertainment of the credentials of the person such as the educational qualifications, experience and expertise for the position of an Independent Director of the Company.
The Committee shall be guided by the following criteria:
- The Person to be appointed as an Independent Director should possess the qualifications, expertise and experience requisite to the position.
- The Committee while identifying a person for the position of an Independent Director may be guided by the fact that the company seeks the guidance, insights and directions from the Independent Directors derived from their vast experience while having them on its Board. The review of the business by the Independent Directors, their advice and expertize helps the Company in sound decision making.
- The integrity, experience, expertize and foresight of the Independent Directors stands as a great asset to the Company, besides the honour their association bestows upon the Company.
- To recommend for the position of the Independent director the Committee be guided by the provisions under the Company law to determine the status of independence of the Director.
- For determining and recommending the terms of appointment in reference to the tenure, reappointment and others, the Committee shall be guided by the applicable provisions of the Company law.
- The appointment and the reappointment of all the independent directors shall be subject to the applicable provisions of the Company Law.
- The Remuneration / Compensation / Commission etc., to the Independent Directors shall be determined by the Committee and recommended to the Board for approval at the time of appointment. The sitting fees payable to the Independent Directors shall be as determined by the Board from time to time.
6. REMUNERATION PAYABLE TO DIRECTORS, KEY MANAGERIAL PEROSONNEL AND OTHER EMPLOYEES
Principles of remuneration
- The remuneration system shall be based on the principles of meritocracy and fairness.
- The remuneration payable shall be based on the performance benchmarks of the respective position and industry standards.
- The remuneration structure of the Directors, Key Managerial Personnel and Senior Management Personnel should strike a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.
- The remuneration fixed of all the other employees shall be performance driven and should be as per industry standards and in accordance with the Board approved Human Resource Policies. The remuneration structure may or may not be consisting of fixed and incentive categorization. Annual Review of the Remuneration
- The Committee shall annually review the remuneration payable to the Executive Directors/Whole Time Directors/Managing Director and recommend any revision thereof on the basis of financial conditions of the company and the performance of the respective director.
- The annual review of the remuneration payable to all the employees of the company including the Key Managerial Personnel and Personnel at the Senior Management level shall be based on the review of the performance against the benchmarks set for the respective position. The same shall be subject to the Board approved Human Resource Policies of the Company. Remuneration to the Executive Directors/Whole time Director/Managing Director (Director)
- The remuneration and commission to be paid to the Executive Directors/Managing Director/Whole time Director shall be in accordance with the provisions of the Company Law and the rules made thereunder.
- The Committee while recommending the remuneration shall ensure that the level and composition of remuneration is reasonable to attract, retain and motivate directors of the quality required to run the company successfully and is thus sufficient to justify the position and responsibility of the Directors.
7. EVALUATION MECHANISM OF THE BOARD, COMMITTEES AND DIRECTORS
The Committee shall be empowered to specify the manner for effective evaluation of performance of the Board, its Committees and the individual directors to be carried out. It shall lay down the manner for effective evaluation of performance of Board, its committees and individual directors, review its implementation and compliance.
8. AMENDMENT TO THE POLICY
The Policy shall be reviewed annually or earlier if deemed necessary by the Board of Directors of the Company.
The amendments in the Policy may also be necessitated as and when the applicable provisions of the Company Law based on which the Policy is made, is amended. With effect from the date of amendment in law the amended provisions will prevail over the policy until the suitable amendments are made to the Policy.