OVOBEL FOODS LIMITED
Policy on Related Party Transaction
Preamble
The Board of Directors of Ovobel Foods Limited (the “Company”) have adopted the following Policy on Related Party Transaction (“Policy”), as per the requirement of Regulation 23 of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2015.
The Policy governs the transactions with related parties, which can present a potential or actual conflict of interest which may arise upon the transactions entered into by the Company with the related parties and whether such transactions are consistent with the interest of the Company and its members.
The Policy also acts as a guideline for identification of related parties and determines the materiality of related party transactions.
Purpose
The purpose of this Policy is to:
a) ensure proper approval, disclosure and reporting of transactions between the Company and any of its related parties as per the provisions of SEBI Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2015 and Companies Act, 2013 and the Rules there under; and
b) determine the materiality thresholds for related party transactions.
Definitions
For the purposes of this policy
“Audit Committee or Committee” shall mean a Committee of the Board of Directors of the Company constituted under provisions of Listing agreement and Companies Act, 2013.
“Board” means Board of Directors of Ovobel Foods Limited
“Company” means Ovobel Foods 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 Ovobel Foods Limited
“Key Managerial Personnel” shall mean key managerial personnel in relation to Ovobel Foods Limited as defined under the Companies Act, 2013, as follows:
- The Chief Executive Officer or the managing director or the manager;
- The Company Secretary;
- The whole-time Director;
- The Chief Financial Officer;
“Material Modifications” means any modifications to the material related party transactions which were approved by the Audit Committee or Shareholders during the year which will change the complete nature of the transaction and in case of monetary thresholds which is in excess of 10% of the originally approved transaction, in case of exigencies only.
“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 10% of the annual consolidated turnover of the Company as per last audited financial statements of the Company as defined under Regulation 23 of the Listing Regulations and the contracts or arrangements given under Companies Act, 2013. Provided that in case of any amendment to the Act or Listing Regulations, definition of Material Related Party Transactions will be deemed to be changed without any further approval of Audit Committee or Board. Further, in case of transactions involving payments made with respect to brand usage or royalty, exceeding 5% of the annual consolidated turnover of the company as per last audited financial statements of the Company, shall also be considered as material RPT under Listing Regulations. Any reference made hereunder with respect to Material Related Party transaction shall include all subsequent material modifications.
“Ordinary course of business” shall include the usual transactions, the transactions/actions which is consistent with the past practices undertaken by the Company to conduct its business operations and includes such action that was taken in the ordinary course of the normal day to day operations of the Company, and includes all such activities which the company can undertake as per the charter documents of the Company.
“Policy” shall mean the Policy on Related Party Transactions of Ovobel Foods limited
“Related Party” shall have the same meaning as defined in the Companies Act and the SEBI LODR Regulations.
“Related Party Transaction” shall have the same meaning as defined in the Companies Act and the SEBI LODR Regulations.
“Relative” means relative as defined under the Companies Act, 2013 and includes anyone who is related to another, if –
- They are members of a Hindu undivided family;
- They are husband and wife ; or
- 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)
“Shareholders” shall mean the shareholders of Ovobel Foods Limited
“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.
“SEBI LODR Regulations” means Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2015, as amended from time to time.
words and expressions used and not defined in this Policy but defined in the Companies Act and SEBI LODR Regulations shall have the meanings respectively assigned to them in those Acts.
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 10% (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.
Audit Committee Approval-
All Related Party Transactions, irrespective of whether they are material or not, shall be entered into only after the prior approval of the Audit Committee is obtained.
In case any member of the Committee is interested in the transaction proposed for approval, the interested member shall abstain from voting and only the dis-interested members shall vote on the resolution.
For the purpose of the approval, the Company shall provide the Audit Committee with the following details in order to enable it to take a learned decision:-
- The name of the related party and nature of relationship.
- The nature, duration and particulars of the contract or arrangement in case the same have been finalised.
- 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.
- Any other data, depending on the transaction, which would be relevant or important for the Committee to take a decision.
*Omnibus approval by Audit Committee:
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 this policy 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;
- 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
Approval of the Shareholders-
All Material Related Party Transactions, shall be entered into only after the approval 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:
- The name of the related party and nature of relationship.
- The nature, duration and particulars of the contract or arrangement in case the same have been finalised.
- 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.
- Any other data, depending on the transaction, which would be relevant or important for the members to take a decision.
Review of Related Party Transactions-
All the Related Party Transactions shall be reviewed on a periodic basis by the Audit Committee and the Company shall provide the details of all such transactions to the Committee at its meeting at least once every quarter.
RPTs not approved as per this Policy
In the event the Company becomes aware of a RPT with a Related Party that has not been approved as per this Policy prior to its consummation, the matter shall be reviewed by the Audit Committee. The Audit Committee shall consider all the relevant facts and circumstances regarding the RPT, and shall evaluate all options available to the Company, including ratification, revision or termination of the RPT. The Audit Committee shall also examine the facts and circumstances pertaining to the failure of reporting such RPT to the Committee under this Policy, and shall take any such action it deems appropriate.
Where the Audit Committee determines not to ratify a RPT that has commenced without approval, the Audit Committee, as appropriate, may direct additional actions including, but not limited to, immediate discontinuation or rescission of the transaction. The Audit Committee has authority to modify or waive any procedural requirements of this Policy.
Disclosures
Appropriate disclosures as required under the Act and the Listing Regulations shall be made in the Annual Return, Directors Report and to the Stock Exchanges.
Authority to make amendments:
Any Changes to the policy on account of regulatory requirements will be reviewed and approved by the Audit Committee or the Board or Chief Financial Officer of the Company subject to approval of Audit Committee. The Audit Committee/ Board will give suitable directions/ guidelines to implement the same.
In the event, any provisions contained in this Policy is inconsistent with the provisions contained in the Listing Regulations, the Companies Act, 2013 or Accounting Standards, etc. or any amendments thereto, (Regulatory Acts), the provisions contained in the Regulatory Acts will prevail.
*This policy shall be disclosed on the Company’s website and the web link to the same shall be provided in the Annual Report.