Code of Conduct for Members of the Board and Senior Management of Advance Steel Tubes Limited (pursuant to sub-clause II(E)* of Clause 49 of Listing Agreement)
1. PREAMBLE
The new provisions of Clause 49 of the Listing Agreement and contemporary practices of good corporate governance provide that the Company shall have a Code of Conduct for all members of the Board of Directors and Senior Management Personnel. Hence this Code.
1. This Code of Conduct divided into Part A: applicable to the Directors and Part B: applicable to the Senior Management of the Company, was approved by its Board of Directors.
2. For the purpose of this Code, "Directors" shall mean all the Directors on the Board of Directors of the Company and "Senior Management" shall mean personnel of the Company who are members of core management team excluding Board of Directors. Normally this would comprise all members of management one level below the Executive Directors including all functional heads reporting to the Managing or Executive Directors.
2. PHILOSOPHY
1. Basic philosophy of the Code of Conduct has been guided by the practices of good Corporate Governance followed by the Company. The core values of the Company are:-
- • Commitment to excellence
- • Integrity including intellectual honesty, openness, fairness & trust.
- • Care for people
- • Dynamic & successful business organisation
- • A socially-valued enterprise
- • Business integrity
2. The Code of Conduct therefore aligns around the said core values and the commitment to maintain the highest standards in its interface with all stake-holders, society at large and the environment.
3. The Directors and Senior Management recognise that they have fiduciary responsibility and are accountable to maximise shareholder value through good business practices and controls.
* Consequent to revised Clause 49 of the Listing Agreement with Stock Exchanges applicable w.e.f. 1st October 2014 [earlier Clause I (D)].
PART A
1. The Directors of the Company shall endeavour and would:
- a. Use due care and diligence in performing their duties of office and in exercising the powers attached to that office.
- b. Act honestly and use their powers of office, in good faith and in the best interests of the Company.
- c. Not make improper use of information nor take improper advantage of their position as a Director.
- c. Not allow personal interests to conflict with the interests of the Company and they shall not undertake any assignment or enter into any material, financial and commercial transactions that may have a potential conflict with or prejudicial to the interest of the Company, without proper disclosure to the Board.
- d. Make all necessary disclosures to the Company in terms of the Companies Act 2013, the Listing Agreement and any other law for the time being in force.
- e. Not engage in conduct which may bring discredit to the Company.
- f. Be independent in judgement and actions, and to take all reasonable steps to be satisfied as to the soundness of all decisions taken by the Board of Directors.
- g. Ensure the confidentiality of information they received whilst being in office of Director and disclosed only when authorised by the Company, or is required by law.
2.* Duties of Independent Directors as per Schedule IV of the Companies Act 2013 (Act) shall be as under:
The independent directors shall-
- a. Undertake appropriate induction and regularly update and refresh their skills, knowledge and familiarity with the company.
- b. 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.
- c. Strive to attend all meetings of the Board of Directors and of the Board committees of which he is a member.
- d. Participate constructively and actively in the committees of the Board in which they are chairpersons or members.
- e. Strive to attend the general meetings of the company.
- f. 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.
- g. Keep themselves well informed about the company and the external environment in which it operates.
- h. Not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board.
- i. 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.
- j. 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.
- k. Report concerns about unethical behaviour, actual or suspected fraud or violation of the company’s code of conduct or ethics policy.
- l. Acting within his authority, assist in protecting the legitimate interests of the company, shareholders and its employees.
- m. 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.
3.*Duties of Directors as per Section 166 of the Companies Act 2013 shall be as under:
- a. Subject to the provisions of the Act, a director of a company shall act in accordance with the articles of the company.
- c. 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.
- d. A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
- e. 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.
- f. 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.
- g. A director of a company shall not assign his office and any assignment so made shall be void.
- h. If a director of the company contravenes the provisions of Section 166, such director shall be punishable with fine which shall not be less than one lac rupees but which may extend to five lac rupees.
PART B
1.The Senior Management shall endeavour to:
- a. Devote their utmost to achieve the goals of the Company and the standards set before themselves.
- b. Carry on the business of the Company complying with all relevant laws, rules and regulations.
- c. Ensure that financial records and present financial reports in accordance with the provisions of law and applicable accounting standards so as to give a true and fair view of the state of affairs of the company.
- d. Ensure that necessary internal control systems are enforced effectively whereby fraud and other illegalities or irregularities, if any, are detected and timely remedial action is taken.
- e. Ensure confidentiality of all material sensitive information of the affairs of the Company coming in their possession and not to disclose or use the same for personal profit or for the advantage of any other person unless the same is required to be disclosed to any other person in terms of applicable regulations.
- f. Make all necessary disclosures to the Company in terms of the Companies Act 2013, the Listing Agreement and any other law for the time being in force.
- g. Disclose and obtain requisite approval under the law in cases where personal interest might conflict with the interest of the Company. Senior Management personnel shall also from time to time and at any time, make disclosures to the Board relating to all material financial and commercial transactions where they have personal interest that may have a potential conflict with the interest of the Company at large [e.g. dealing in company shares, commercial dealings with bodies corporate which have shareholding of management and their relatives, etc.
- h. Pursue healthy Human Resource policies without any discrimination on account of caste, religion or sex, promote meritocracy, uphold self respect and human dignity to instill a sense of belonging to the Organization.
- i. Ensure that in dealing with customers, lenders, investors, Government and the community at large, the Company's image and its interests are well protected.
- j. Maintain highest level of professional conduct that would enhance the image, goodwill and credibility of the business of the Company.
- k. Create an atmosphere of highest integrity, trust, fairness and honesty in performance of their duty which should strengthen the bond of relationship with people, both internally and externally.
- l. Promote SHE factors, biz., safe, healthy working environment and comply with all regulations concerning preservation of the environment of the territory of operation, in conducting the Company's business.
- m. Remain apolitical while involving in conduct of Company's affairs.
2. The Senior Management shall not:
- a. Engage by themselves or on behalf of the Company in any activity detrimental to or against national interest.
- b. Receive or offer, directly or indirectly, any illegal payment or charitable benefits which are intended to or perceived to obtain business favors barring nominal gifts which are customarily given and are of commemorative nature.
- c. Permit misuse of company's properties and assets, both tangible and intangible.
This Code is in addition to and not in supersession of other Codes for the time being in force, viz. Corporate Ethics and Code of Conduct; implemented voluntarily by the Company; Code of Conduct for Prevention of Insider Trading and Code of Corporate Disclosure Practices, pursuant to SEBI (Prohibition of Insider Trading) Regulations, 1992. The Code of Conduct shall be posted on the website of the Company.
All the members of the Board of Directors and Senior Management shall affirm in writing compliance with this Code immediately after the Code is approved and adopted by the Board of Directors of the Company and on an annual basis in every financial year as per the format given at Annexure-I. The Annual Report of the Company shall contain a declaration to this effect signed by the Managing Director as per the format in Annexure-II.
ANNEXURE
Date..................
The Board of Directors
........................
New Delhi
Dear Sirs,
Re: Code of Conduct for members of the Board and Senior Management - Financial Year....
I hereby affirm compliance with the Code of Conduct for members of the Board and Senior Management of the Company.
Name ....................................
Director/ Designation if Member of Senior Management
ANNEXURE II
Date..................
The Board of Directors
........................
New Delhi
Re: Re: Code of Conduct for members of the Board and Senior Management
It is hereby declared that all the members of the Board and the Senior Management personnel have affirmed compliance with the aforesaid Code of Conduct during the Financial year ...............
POLICY ON RELATED PARTY TRANSACTIONS
1) SCOPE AND PURPOSE OF THE POLICY
Related party transactions can present a potential or actual conflict of interest which may be against the best interest of the company and its shareholders. Considering the requirements for approval of related party transactions as prescribed under the Companies Act, 2013 (“Act”) read with the Rules framed there under and Clause 49 of the Listing Agreement (as amended by SEBI Circulars dated April 17, 2014 and September 15, 2014), Advance Steel Tubes Limited (“ASTL” or “the Company”) has formulated guidelines for identification of related parties and the proper conduct and documentation of all related party transactions.
Also, Clause 49(VII)(C) of the Listing Agreement requires a company to formulate a policy on materiality of related party transactions and dealing with related party transactions. In light of the above, Advance Steel Tubes Limited has framed this Policy on Related Party Transactions (“Policy”).
This Policy has been adopted by the Board of Directors of the Company based on recommendations of the Audit Committee. Going forward, the Audit Committee would review and amend the Policy, as and when required, subject to the approval of the Board.
2) OBJECTIVE OF THE POLICY
The objective of this Policy is to set out (a) the materiality thresholds for related party transactions and; (b) the manner of dealing with the transactions between the Company and its related parties based on the Act, Clause 49 of the Listing Agreement and any other laws and regulations as may be applicable to the Company.
3) DEFINITIONS
“Arm’s length transaction (‘ALP’)” means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.
“Related Party” , with reference to a Company, shall have the same meaning as defined in Section 2(76) of the Companies Act, 2013 and Clause 49 of the Listing Agreement
“Related Party Transaction” (RPT) means – for the purpose of the Act, specified transaction mentioned in clause (a) to• (g) of sub-section 1 of Section 188; for the purpose of RC 49, any transaction 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. A "transaction" with a related party shall be construed to include single transaction or a group of transactions in a contract.
4) MATERIALITY THRESHOLDS
Clause 49 of the Listing Agreement requires a company to provide materiality thresholds for transactions beyond which the shareholders’ approval will be required by way of a special resolution. The Company has fixed its materiality threshold at 10% of the annual consolidated turnover of the Company as per last audited financial statements of the company for the purpose of Clause 49(VII)(C) of the Listing Agreement.
5) MANNER OF DEALING WITH RELATED PARTY TRANSACTIONS
- (a) Identification of related parties
Advance Steel Tubes Limited has formulated guidelines for identification and updating the list of related parties as prescribed under Section 2(76) of the Act read with the Rules framed there under and Clause 49 of the Listing Agreement.
- (b) Identification of related party transactions
Advance Steel Tubes Limited has formulated guidelines for identification of related party transactions in accordance with Section 188 of the Act and Clause 49 of the Listing Agreement. ADVANCE STEEL TUBES LIMITED has also formulated guidelines for determining whether the transaction is in the ordinary course of business and at arm’s length basis and for this purpose, the Company seeks external professional opinion, if necessary.
- (c) Procedure for approval of related party transactions
Approval of the Audit Committee
- • All related party transactions require prior approval of the Audit Committee. Omnibus approval The Company may obtain omnibus approval from the Audit Committee for such transactions, subject to compliances with the following conditions:
- • The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of the company;
- • The omnibus approval shall provide –
- (i) the name/s of the related party, nature of transaction, period of transaction, maximum amount of transaction that can be entered into,
- (ii) Such other conditions as the Audit Committee may deem fit.
- • 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 approval shall be valid for a period of one year and shall require fresh approvals after the expiry of one year.
While assessing a proposal put up before the Audit Committee / Board for approval, the Audit Committee / Board may review the following documents / seek the following information from the management in order to determine if the transaction is in the ordinary course of business and at arm’s length or not:
Nature of the transaction i.e. details of goods or property to be acquired / transferred or services to be rendered / availed – including description of functions to be performed, risks to be assumed and assets to be employed under the proposed transaction;
Key terms (such as price and other commercial compensation contemplated under the arrangement) of the proposed transaction, including value and quantum;
Key covenants (non-commercial) as per the draft of the proposed agreement/ contract to be entered into for such transaction;
Special terms covered / to be covered in separate letters or undertakings or any other special or sub arrangement forming part of a composite transaction;
Benchmarking information that may have a bearing on the arm’s length basis analysis, such as: o market analysis, research report, industry trends, business strategies, financial forecasts, etc.; o third party comparables, valuation reports, price publications including stock exchange and commodity market quotations; o management assessment of pricing terms and business justification for the proposed transaction; o comparative analysis, if any, of other such transaction entered into by the company.
- • Approval of the Board of Directors of the Company As per the provisions of Section 188 of the Act, all kinds of transactions specified under the said Section and which are not in the ordinary course of business and at arm’s length basis, are placed before the Board for its approval.
In addition to the above, the following kinds of transactions with related parties are also placed before the Board for its approval:
- • Transactions which may be in the ordinary course of business and at arm’s length basis, but which are as per the policy determined by the Board from time to time (i.e. value threshold and/or other parameters) require Board approval in addition to Audit Committee approval;
- • Transactions in respect of which the Audit Committee is unable to determine whether or not they are in the ordinary course of business and/or at arm’s length basis and decides to refer the same to the Board for approval;
- • Transactions which are in the ordinary course of business and at arm’s length basis, but which in Audit Committee’s view requires Board approval.
Transactions meeting the materiality thresholds laid down Clause 5 of the Policy, which are intended to be placed before the shareholders for approval.
Approval of the Shareholders of the Company All the transactions with related parties meeting the materiality thresholds, laid down in Clause 5 of the Policy, are placed before the shareholders for approval.
For this purpose, all entities falling under the definition of related parties shall abstain from voting irrespective of whether the entity is a party to the particular transaction or not.
Clause 49(VII) (E) provides that the requirement for seeking shareholders’ approval shall not be applicable to transactions between ASTL and its wholly owned subsidiary/ies whose accounts are consolidated with the Company.
In addition to the above, all kinds of transactions specified under Section 188 of the Act which (a) are not in the ordinary course of business and at arm’s length basis; and (b) exceed the thresholds laid down in Companies (Meetings of Board and its Powers) Rules, 2014 are placed before the shareholders for its approval.
5) DISCLOSURES
Advance Steel Tubes Limited shall disclose, in the Board’s report, transactions prescribed in Section 188(1) of the Act with related parties, which are not in ordinary course of business or arm’s length basis along with the justification for entering into such transaction. In addition to the above, Advance Steel Tubes Limited shall also provide details of all related party transactions meeting the materiality threshold (laid down in Clause 5 of the Policy above) on a quarterly basis to the stock exchanges.
In any case, where the Audit Committee determines not to ratify a related party transaction that has been commenced without approval, the Audit Committee, as appropriate, may direct additional actions including, but not limited to, discontinuation of the transaction or seeking the approval of the shareholders, payment of compensation for the loss suffered by the related party etc. In connection with any review/approval of a related party transaction, the Audit Committee has authority to modify or waive any procedural requirements of this Policy.
