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Related Party Transaction Policy

Preamble

TIL Limited (“the Company”) has always been committed to good corporate governance practices. As a matter of practice, the Company recognizes that certain relationships can present potential or actual conflict of interest and may raise questions whether transactions associated with such relationships are consistent with Company’s and its stakeholders’ best interest.

The Company must specifically ensure that certain Related Party Transactions (as defined below) are managed and disclosed in accordance with the strict legal and accounting requirements to which the Company is subject.

The Equity Listing Agreement with the Stock Exchanges mandates formulation of a policy on transactions with Related Parties and dealing with Related Party Transactions. In accordance to this, the Board of Directors of the Company has adopted the Related Party Transaction Policy (“the Policy”) to set forth the procedures under which certain transactions with Related Parties must be reviewed, and approved or ratified.

No Related Party Transaction may be entered into by the Company or any of its subsidiaries or associates, except in accordance with the provisions of this policy.

Purpose

This policy is framed as per requirement of Clause 49 of the Listing Agreement entered by the Company with the Stock Exchanges and also to comply with the provisions of Section 188 of the Companies Act, 2013 and is intended to ensure the governance and reporting of transactions between the Company and its Related Parties. Such transactions are appropriate only if they are in the best interest of the Company and its Shareholders. The Company is required to disclose each year in the Financial Statements transactions between the Company and Related Parties as well as policies concerning transactions with Related Parties.

Definitions

“Act” means the Companies Act, 2013 and the Rules framed there under, including any amendments, modification, clarifications, circulars or re-enactment thereof.

“Arm’s Length Transaction” means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.

“Associate Company” means any other Company, in which the Company has significant influence, but which is not a Subsidiary Company of the Company having such influence and includes a joint venture company.

Explanation – For the purpose of this Clause, “Significant influence” means Control of at least twenty percent of total share capital, or of business decisions under an agreement.

“Subsidiary Company” means a company in which the holding company-

(i) Controls the composition of the Board of Directors; or

(ii) Exercises or controls more than one-half of the total share capital either on its own or together with one or more of its subsidiary companies:

Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

“Audit Committee” means the Committee of the Board formed under Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

“Board of Directors” or “Board” means the Board of Directors of the Company.

“Key Managerial Personnel” means Key Managerial Personnel of the Company in terms of the Companies Act, 2013 and the Rules made there under.

“Related Party” means a person or an entity:

(i) Which is a related party under Section 2(76) of the Companies Act, 2013

(ii) Which is a related party under the applicable accounting standards.

“Related Party” under Section 2(76) of the Companies Act, 2013 and rules made there under is as follows-

(i) A director or his relative;

(ii) A key managerial personnel or his relative;

(iii) A firm, in which a director, manager or his relative is a partner;

(iv) A private company in which a director or manager is a member or director;

(v) A public company in which a director or manager is a director or holds along with his relatives, more than two per cent of its paid-up share capital;

(vi) 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;

(vii) Any person on whose advice, directions or instructions a director or manager is accustomed to act:

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;

(viii) Any company which is-

(a) A holding, subsidiary or an associate company of such company; or

(b) A subsidiary of a holding company to which it is also a subsidiary;

(ix) Such other person as may be prescribed;

“Relative” with reference to any person, means anyone who is related to another, if-

(i) They are members of a Hindu undivided family;

(ii) They are husband and wife; or

(iii) One person is related to the other person as:

(a) Father (including step-father)

(b) Mother (including step-mother)

(c) Son (including step-son)

(d) Son’s wife

(e) Daughter

(f) Daughter’s husband

(g) Brother (including step-brother)

(h) Sister (including step-sister)

“Related Party Transaction” means transactions as specified under Section 188 of the Companies Act, 2013 or rules made there under and Clause 49 of the Listing Agreement including any amendment or modification thereof, as may be applicable.

“Material Related Party Transaction” means a transaction with a related party if the transaction / 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.

Identification Of Potential Related Party Transactions

All the Companies in TIL Group will be considered as Related Parties.

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 request, for being placed before the Audit Committee and the Board. The Board shall record the disclosure of interest and the Audit Committee will determine whether the transaction does, in fact, constitute a Related Party Transaction requiring compliance with this policy.

The Company strongly prefers to receive such notice of any potential Related Party Transaction well in advance so that the Audit Committee has adequate time to obtain and review information about the proposed transaction.

Review and Approval of Related Party Transactions

Audit Committee

Every Related Party Transaction shall be subject to the prior approval of the Audit Committee. Any member of the Committee who has a potential interest in any Related Party Transaction will abstain from discussion and voting on the approval of the Related Party Transaction.

To review a Related Party Transaction, the Committee will be provided 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:

i) The name of the related party and nature of relationship;
ii) The nature, duration of the contract and particulars of the contract or arrangement;
iii) The material terms of the contract or arrangement including the value, if any;
iv) Any advance paid or received for the contract or arrangement, if any;
v) The manner of determining the pricing and other commercial terms, both included as part of the contract and not considered as part of the contract;
vi) 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;
vii) The persons / authority approving the transaction; and
viii) 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 Committee will consider the following factors, among others, to the extent relevant to the Related Party Transaction:

i) Whether the terms of the Related Party Transaction is 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;
ii) 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;
iii) Whether the Related Party Transaction would affect the independence of the directors / KMP;
iv) Whether the proposed transaction includes any potential reputational risk issues that may arise as a result of or in connection with the proposed transaction;
v) 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
vi) 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.

The Audit Committee may grant omnibus approval for Related Party Transactions proposed to be entered by the Company subject to the following conditions:-

i) The 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.

ii) The Committee should satisfy itself the need for such omnibus approval and that such approval is in the interest of the Company.

iii) Such omnibus approval shall specify:

a) Name(s) of the Related Party
b) Nature of transaction
c) Period of transaction
d) Maximum amount of transaction that can be entered into
e) The indicative base price / current contracted price and formula for variation in price, if any
f) Other conditions which the Committee deems fit.

iv) Where the need for Related Party Transaction cannot be foreseen and the details as per above point 2 (iii) are not available, the Committee can give omnibus approval for such transactions subject to their value not exceeding Rs. 1 crore per transaction.

v) The Committee will review on a quarterly basis, the details of all related party transactions entered into by the Company pursuant to each of the omnibus approval given.

vi) Such omnibus approvals shall be valid for a period of not exceeding one year and shall require fresh approvals after expiry of one year. The Committee will consider and review the omnibus approvals at the first committee meeting of every financial year.

Board

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 Board to approve the Related Party Transaction, then the Board shall consider and approve the Related Party Transaction 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.

Shareholders

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 Basis shall also require the approval of the Board / Shareholders through Special Resolution as per the requirements of the Companies Act 2013 and such Related Parties shall abstain from voting on such resolution as per the provisions of the applicable law.

Notwithstanding the foregoing, the following Related Party Transactions shall not require prior approval of Audit Committee or Shareholders:

i) Transactions entered into between the Company and its wholly owned subsidiary whose accounts are consolidated with the Company and placed before the Shareholders at the general meeting for approval.

ii) 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.

iii) Any transaction in which the Related Party’s interest arises solely from ownership of securities issued by the Company and all holders of such securities receive the same benefits pro rata as the Related Party.

Policy Framework

Related Party Transactions Not Approved Under This Policy

In the event the Company becomes aware of a Transaction with a Related Party, which is regulated under Clause 49 of the Listing Agreement or which is not on arm’s length basis or not in the ordinary course of business, that has not been approved or is not in accordance with the delegation approved under this Policy, the matter shall be reviewed by the Committee. The Committee shall consider all the relevant facts and circumstances regarding the Related Party Transaction, and shall evaluate all options available to the Company, including ratification, revision or termination of the Related Party Transaction. The Committee shall also examine the facts and circumstances pertaining to the failure of reporting such Related Party Transaction to the Committee under this Policy and failure of the internal control systems, and shall take any such action it deems appropriate. In connection with any review of a Related Party Transaction, the Committee has authority to modify or waive any procedural requirements of this Policy.

Transaction Not Covered Under The Policy

All the Related Party transactions which are not covered by the provisions of the Companies Act, 2013 and / or of the Listing Agreement will not be governed by this Policy.

Disclosures

Details of all material transactions with Related Parties shall be disclosed to stock exchanges quarterly along with the compliance report on corporate governance.

The Company shall disclose the policy on dealing with Related Party Transactions on its website and web link shall be provided in the Annual Report.

Amendments in Law

Any subsequent amendment/modification in the listing agreement and / or other applicable laws in this regard shall automatically apply to this policy.

Contact Us

TIL Limited

1, Taratolla Road,
Garden Reach,
Kolkata 700 024, West Bengal
Phone: +91 33 2469 3732-6
Fax: +91 33 2469 2143, 3731

Toll Free Number:

+1800 265 1535

Email:

mktg-til@tilindia.com

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