Policy on Dealing with Related Party Transactions
It has been made mandatory by the Clause 49 of the Listing Agreement (vide SEBI circular no. circular CIR/CFD/POLICY CELL/2/2014, dated April 17, 2014) for all listed companies to formulate a policy on materiality and dealing with related party transactions with effect from October 1, 2014. This policy is drafted in line with the above mentioned requirements. The Board of Directors of the Eastern Silk Industries Limited approved and adopted this policy. Subsequently, the Board approved the amendments to the policy made to bring the same in line with amendments made by SEBI to the Clause 49 of the listing agreement vide its circular CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014. Subsequently the Board of Directors approved the amendments to this policy to bring in line with the amendments made by SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 (LODR) dated 2nd September, 2015.
The policy shall take effect from October 1, 2014.
For the purposes of this policy "Board" means Board of Directors of ESIL.
“Company or ESIL” shall mean Eastern Silk Industries Limited, wherever it is referred to in the policy.
“Control” shall have the same meaning as defined in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
“Directors” shall mean the directors of ESIL.
“Key Managerial Personnel” shall mean key managerial personnel in relation to ESIL as defined under the Companies Act, 2013, as follows:
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer;
“Policy” shall mean the Policy on Related Party Transactions of ESIL.
“Related Party” shall mean related party as defined in SEBI (LODR) Regulation, 2015, as follows:
An entity shall be considered as related to the company if:
(i) such entity is a related party under Section 2(76) of the Companies Act, 2013; or (ii) such entity is a related party under the applicable accounting standards.
“Related Party Transaction” shall mean any transfer of resources, services or obligations between a company and a related party, regardless of whether a price is charged and a “transaction” with a related party shall be construed to include a single transaction or a group of transactions in a contract.
“Relative” means relative as defined under the Companies Act, 2013 and includes anyone who is related to another, if –
i. They are members of a Hindu undivided family ;
ii. They are husband and wife ; or
iii. Father (including step-father)
iv. Mother ( including step-mother)
v. Son ( including step-son)
vi. Son’s wife
viii. Daughter’s husband
ix. Brother ( including step-brother)
x. Sister (including step-sister)
“Shareholders” shall mean the shareholders of ESIL.
“Special Resolution” shall mean a resolution in which the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.
Definition of related party amended on May 21, 2016 to bring the same in line with the definition under SEBI (LODR) Regulation, 2015.
The Policy Materiality of Related Party Transactions:
Any transaction with a related party shall be considered material 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.
Dealing with Related Party Transactions:
Identification of Related Party Transactions-
It shall be the responsibility of the Directors and Key Managerial Personnel to provide to the Company, notice of their interest in any transaction proposed to be entered into by the Company, in which they are directly or indirectly interested and abstain from voting in the meeting of the Board and as the case may be at the meeting of the Shareholders in which the transaction is proposed to be approved.
Approval of the Shareholders- All Material Related Party Transactions, except those entered into by ESIL, shall be entered into only after the approval of shareholders of the Company through a special resolution in which 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.
In order to assist the shareholders to take an informed decision, the notice calling for the general meeting shall have the following details in the explanatory statement annexed to the resolution:
1. The name of the related party and nature of relationship.
2. The nature, duration and particulars of the contract or arrangement in case the same have been finalised.
3. The material terms of the contract or arrangement including value, if any. If the same are not arrived at as on date of tabling of the transaction, the estimated/ projected values.
4. Any other data, depending on the transaction, which would be relevant or important for the members to take a decision.