1- PREAMBLE

The Board of Directors (the “Board”) of RCI Industries & Technologies Limited (the “Company” or “RCIIND”), has adopted the following policy and procedures with regard to Related Party Transactions as defined below. The Audit Committee will review and may amend this policy from time to time.

This policy will be applicable to the Company. This policy is to regulate transactions between the Company and its Related Parties based on the applicable laws and regulations applicable on the Company.

2- OBJECTIVE

This Policy is intended to ensure due and timely identification, approval, disclosure and reporting of transactions between the Company and any of its Related Parties in compliance with the applicable laws and regulations as may be amended from time to time.

The provisions of this Policy are designed to govern the approval process and disclosure requirements to ensure transparency in the conduct of Related Party Transactions in the best interest of the Company and its shareholders and to comply with the statutory provisions in this regard.

3- DEFINITIONS

“Audit Committee or Committee” means Committee of Board of Directors of the Company constituted under provisions of SEBI (LODR) Regulations 2015 and Companies Act, 2013.

“Board” means Board of Directors of the Company.

“Key Managerial Personnel” means Key Managerial Personnel as defined under the Companies Act, 2013.

“Material Related Party Transaction” means a Related Party Transaction which individually or taken together with previous transactions during the financial year, exceeds ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company or such limits as may be prescribed either in the Companies Act, 2013 or the SEBI (LODR) Regulations 2015, from time to time.

“Related Party” means related party as defined in SEBI (LODR) Regulations 2015 which is as follows: 1. Such entity is a related party under Section 2(76) of the Companies Act, 2013 ; or 2. Such entity is a related party under applicable accounting Standards.

“Related Party Transaction” means any transaction directly or indirectly involving any Related Party which is a transfer of resources, services or obligations between a company and a related party, regardless of whether a price is charged.

“Relative” means relative as defined under the Companies Act, 2013 and includes anyone who is related in any of the following manner –

  • Members of a Hindu undivided family ;
  • Husband and wife ;
  • Father (including step-father)
  • Mother ( including step-mother)
  • Son ( including step-son)
  • Son’s wife
  • Daughter
  • Daughter’s husband
  • Brother ( including step-brother)
  • Sister (including step-sister)

4. POLICY

All Related Party Transactions shall be reported to the Audit Committee and referred for approval by the Committee in accordance with this Policy.

4.1 Procedures for review and approval of Related Party Transactions

  1. All Related Party Transactions or changes therein must be reported to the Compliance Officer and referred for prior approval by the Audit Committee in accordance with this Policy.
    However, the Audit Committee may grant omnibus approval for Related Party Transactions proposed to be entered into by the company subject to the following conditions:

    • The Audit Committee shall lay down the criteria for granting the 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 name/s of the related party, nature of 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;
    • Provided that where the need for Related Party Transaction cannot be foreseen and aforesaid details are not available, Audit Committee may grant omnibus approval for such transactions subject to their value not exceeding Rs.1 crore per transaction.
    • Audit Committee shall review, at least on a quarterly basis, the details of RPTs 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”
  2. The Audit Committee will also undertake an evaluation of the Related Party Transaction. If that evaluation indicates that the Related Party Transaction would require further approval of the Board, or if the Board in any case elects to review any such matter, the Audit Committee will report the Related Party Transaction, together with a summary of material facts, to the Board for its approval.
  3. If the Board is of the view that the Related Party Transaction needs to be approved at a general meeting of the shareholders by way of a special resolution pursuant to Applicable Law, the same shall be put up for approval by the shareholders of the Company.
  4. If prior approval of the Audit Committee / Board / general meeting for entering into a Related Party Transaction is not feasible, then the Related Party Transaction shall be ratified by the Audit Committee and the Board / general meeting, if required, within 3 months of entering in the Related Party Transaction.
  5. In any case where either the Audit Committee / Board / a general meeting determines not to ratify a Related Party Transaction that has been commenced without approval, the Committee or Board or the general meeting, as appropriate, may direct additional actions including, but not limited to, immediate discontinuation or rescission of the transaction, or modification of the transaction to make it acceptable for ratification. In connection with any review of a Related Party Transaction, the Audit Committee / Board has authority to modify or waive any procedural requirements of this Policy.
  6. In determining whether to approve or ratify a Related Party Transaction, the Audit Committee / Board will take into account, among other factors it deems appropriate, whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Person’s interest in the transaction.
  7. No director or Key Managerial Personnel shall participate in any discussion or approval of a Related Party Transaction for which he or she is a Related Party, except that the director / Key Managerial Personnel shall provide all material information concerning the Related Party Transaction to the Audit Committee / Board.
  8. If a Related Party Transaction will be ongoing, the Board / Audit Committee may establish guidelines for the Company’s management to follow in its ongoing dealings with the Related Party.
  9. In addition, the Audit Committee / the Board may review any Related Party Transactions involving independent directors as part of the annual determination of their independence.
  10. Nothing in this Policy shall override any provisions of law made in respect of any matter stated in this Policy.

4.2 Standards for Review

A Related Party Transaction reviewed under this Policy will be considered approved or ratified if it is authorised by the Audit Committee/Board, as applicable, in accordance with the standards set forth in this Policy after full disclosure of the Related Party’s interests in the transaction. As appropriate for the circumstances, the Audit Committee or Board, as applicable, shall review and consider:

  1. the Related Party’s interest in the Related Party Transaction;
  2. the approximate amount involved in the Related Party Transaction;
  3. the approximate amount of the Related Party’s interest in the transaction without regard to the amount of any profit or loss;
  4. whether the Related Party Transaction was undertaken in the ordinary course of business of the Company;
  5. whether the transaction with the Related Party is proposed to be, or was, entered on an arms’ length basis;
  6. the purpose of, and the potential benefits to the Company from the Related Party Transaction;
  7. Whether there are any compelling business reasons for the Company to enter into the Related Party Transaction and the nature of alternative transaction, if any;
  8. Whether the Related Party Transaction includes any potential reputational risk issues that may arise as a result of or in connection with the Related Party Transaction;
  9. Whether the Related Party Transaction would impair the independence of an otherwise independent director or nominee director;
  10. Whether the Company was notified about the Related Party Transaction before its commencement and if not, why pre-approval was not sought and whether subsequent ratification would be detrimental to the Company;
  11. Whether the Related Party Transaction would present an improper conflict of interest, as per provisions of law, for any director or Key Managerial Personnel, taking into account the size of the transaction, the overall financial position of the Related Party, the director or indirect nature of the Related Party’s interest in the transaction and the ongoing nature of any proposed relationship and any other factors the Audit Committee/Board deems relevant.
  12. Required public disclosure, if any ; and
  13. Any other information regarding the Related Party Transaction or the Related Party in the context of the proposed transaction that would be material to the Audit Committee/ Board/ shareholders, as applicable in light of the circumstances of the particular transaction.

The Audit Committee/Board will review all relevant information available to it about the Related Party Transaction. The Audit Committee/Board, as applicable, may approve/ ratify/ recommend to the shareholders, the Related Party Transaction only if the Audit Committee/Board, as applicable, determines in good faith that, under all of the circumstances, the transaction is fair as to the Company. The Audit Committee/ Board, in its sole discretion, may impose such conditions as it deems appropriate on the Company or the Related Party in connection with approval of the Related Party Transaction.

4.3 Determination of Ordinary Course of Business

“In the Ordinary Course of Business” means all such acts and transactions undertaken by the Company, including, but not limited to sale or purchase of goods, property or services, leases, transfers, providing of guarantees or collaterals, in the normal routine in managing trade or business and is not a standalone transaction. The Company should take into account the frequency of the activity and its continuity carried out in a normal organised manner for determination what is in the ordinary course business.

4.4 Determination of Arms’ length nature of the Related Party Transaction

  1. Price Determination
    At the time of determination the arms’ length nature of price charged for the Related Party Transaction, the Audit Committee shall take into consideration the following:

    • Permissible methods of arms’ length pricing as per Applicable Law including such prices where the benefits of safe harbour is available under Applicable Law.
    • For the said purposes the Audit Committee shall be entitled to rely on professional opinion in this regard.
  2. Underwriting and Screening of arms’ length Related Party Transaction
    • A Related Party with whom the Related Party Transaction is undertaken must have been selected using the same screening/ selection criteria/ underwriting standards and procedures as may be applicable in case of an unaffiliated party.
    • The Compliance Officer shall produce evidence to the satisfaction of the Audit Committee for having applied the said procedure.
  3. Related Party Transaction limits:
    • The Related Party Transaction must be within the lower of the following transaction limits with respect to any Related Party :
      • Limits on Material Related Party Transactions; and
      • Expected transaction volumes based on past transactions with Related Parties using linear rate of growth as evidence by past data.
    • Credit limits extended to the Related Party must be usual as for unaffiliated parties.

If the Audit Committee is of the opinion that the Related Party Transaction meets the aforesaid criteria of Ordinary Course of Business and the Arms’ Length nature, the Related Party Transaction will not be treated as a Related Party Transaction for the purpose of this Policy.

4.5 Identification of Potential Related Party Transactions

  1. Each director/Key Managerial Personnel is responsible for providing written notice to the Compliance Officer of any potential Related Party Transaction involving him or her or his or her relatives, including any additional information about the transaction that the Compliance Officer may reasonably request. The Compliance Officer in consultation with other members of management and with the Audit Committee, as appropriate, will determine whether the transaction does, in fact, constitute a Related Party Transaction requiring compliance with this Policy.
  2. Every director/ Key Managerial Personnel of the 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 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 or exercise influence over any such meeting.
  3. Where any director/ Key Managerial Personnel, 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 Board held after he becomes so concerned or interested.
  4. A contract or arrangement entered into by the company without disclosure or with participation by a Director / Key Managerial Personnel who is concerned or interested in any way, directly or indirectly, in the contract or arrangement, shall be voidable at the option of the Company.
  5. The Company strongly prefers to receive such notice of any potential Related Party Transaction well in advance so that the Compliance Officer has adequate time to obtain and review information about the proposed transaction and other matter incidental thereto and to refer it to the appropriate approval authority. Ratification of a Related Party Transaction after its commencement or even its completion may be appropriate in some circumstances.

4.6 Disclosures

  1. The Company is required to disclose Related Party Transactions in the Company’s Board’s Report to shareholders of the Company at the Annual General Meeting.
  2. Details of all Material Related Party Transactions shall be disclosed quarterly along with Company’s Compliance Report on Corporate Governance, in accordance with the SEBI (LODR) Regulations 2015.
  3. The Company is also required to disclose this Policy on its website and also in the Annual Report of the Company.
  4. The Company shall keep one or more registers giving separately the particulars of all contracts or arrangements with any related party.

4.7 Amendment

  1. This policy shall stand amended in terms of the Companies Act, 2013, the rules made there under, and SEBI (LODR) Regulations 2015, as amended from time to time.
  2. The Board or the Audit Committee may review and amend this policy from time to time.

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