Aavas Financiers Limited (the “company”) is of the firm view that in today’s globalized world, where on the one hand exists cut throat competition and on the other side, there is a dearth of availability of candidates with a zeal and passion to perform and outshine. The company also holds a view that fruits of hard work could be reaped only when the plans are in reality executed from beginning to end in the right direction with the right course of action. It is this execution and action that enables to turn day-dream plan into a concrete reality.
With an ambition to become one of the preferred financiers and to outperform its competitors with an ambition to remain in front in delivering best financial solutions, the company proposes policy to pay evenhanded remuneration to its Directors & Key Managerial Personnel (KMP) to align the aspirations of human resources consistent with the goals of the Company.
From regulatory perspective this policy on nomination and remuneration of Directors, Key Managerial Personnel and Senior Management of the Company is in line with the Companies Act, 2013 and provisions of Securities Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015, as amended from time to time.
a. Independent Directors means Directors who has been appointed by Company in terms of Section 149 of Companies Act, 2013 and Regulation 16 of Securities Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015.
b. Key Managerial Personnel (KMP) in relation to Company means as defined under section 2(51) of Companies Act, 2013, as amended from time to time.
c. “Other Employees” means employees of the Company as may be identified by the Nomination and Remuneration Committee for purpose of this policy.
d. ‘‘Senior Management’’ means Officers /personnel of the Company who are members of its core management team excluding board of directors and normally this shall comprise all members of management one level below the chief executive officer/managing director/whole time director/manager (including chief executive officer/manager, in case they are not part of the board) and shall specifically include company secretary and chief financial officer. [w.e.f. 1.4.2019.]
Any other term not defined herein shall have the same meaning as defined in the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, or any other applicable law/regulation/rules.
In view of the definitions given above, the policy is applicable on all Directors, Key managerial Personnel, Senior Management and other employees of the Company.
The Nomination and Remuneration committee of the Company shall be comprised of at least three non-executive directors out of which at least 2/3rd of the directors shall be independent directors, as may be re-constituted by the Board from time to time.
The Policy is divided into three parts:
Part-A Covers the matters to be dealt with and recommended by the Nomination and Remuneration Committee to the Board
Part-B covers the Appointment and Nomination and
Part-C covers remuneration and perquisites etc
The key features of this Company’s policy shall be included in the Board’s Report and shall also be disclosed on the website of the company.
MATTERS TO BE DEALT WITH, PERUSED AND RECOMMENDED BY THE NOMINATION AND REMUNERATION COMMITTEE TO THE BOARD
The Committee shall:
POLICY FOR APPOINTMENT INCLUDING RE-APPOINTMENT AND REMOVAL OF DIRECTOR, KMP AND SENIOR MANAGEMENT
(I) Criteria for determining qualifications, positive attributes and independence of a director for appointment / reappointment:
As per the RBI Master Directions, the Nomination Policy of the Company to ensure ‘fit and proper” status of the proposed/ existing Directors. The policy on the fit and proper criteria shall be on the lines of theguidelines contained in RBI Master Directions. In order to streamline and bring in uniformity in the process of due diligence, while appointing Directors, the Company shall ensure that the procedures mentioned below
are followed and minimum criteria fulfilled by the persons before they are appointed on the Boards:
The Company shall not appoint or continue the employment of any person as Managing Director / Whole time Director who has attained the age of seventy years. Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years.
INDEPENDENCE OF DIRECTOR
The candidate shall be evaluated based on the criteria provided under the applicable laws including Companies Act, 2013 read with Rules thereon and the SEBI Listing Regulations, 2015 with the Stock Exchanges. Each director has an affirmative obligation to inform the Board of any change in circumstances that may put his/her independence at issue.
The director's independence for the independent director will be determined by the Board on an annual basis upon the declarations made by such director as per the provisions of the Companies Act, 2013 read with Rules thereon and the SEBI Listing Regulations, 2015.
A person should possess adequate qualification, expertise and experience for the position for which he / she is being considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the position.
(ii) Term / Tenure:
Managing Director/Whole-time Director
The Company shall appoint or re-appoint any person as Managing Director or Whole time Director for a term not exceeding five years at a time in terms of applicable provisions of Companies Act, 2013. Further, No re-appointment shall be made earlier than one year before the expiry of term.
An Independent Director shall hold office for a term up to five consecutive years on the Board of the Company and shall be eligible for re-appointment on passing of a special resolution by the Company, recommendation of committee based on the report of performance evaluation of Independent director and disclosure of such appointment in the Board's report.
No Independent Director shall hold office for more than two consecutive terms, but such Independent Director shall be eligible for appointment after expiry of three years of ceasing to become an Independent Director. An Independent Director shall not, during the said period of three years, be appointed in or be associated with the Company in any other capacity, either directly or indirectly.
At the time of appointment of Independent Director, it should be ensured that number of Boards on which such Independent Director serves is restricted to seven listed companies as an Independent Director and three listed companies as an Independent Director in case such person is serving as a Whole Time Director of a listed Company.
Key Managerial Personnel / Senior Management
Upon recommendation of Nomination and Remuneration Committee and based on the criteria laid down by said committee for appointment of senior management, the KMPs or senior management may be appointed for such period and on such term as may be approved by the Board or as per criteria approved by the board, respectively.
The Committee shall specify the manner for effective evaluation of performance of Board, its committees and individual directors to be carried out either by the Board, by the Nomination and Remuneration Committee or by an independent external agency and review its implementation and compliance.
The Evaluation process may be carried out as per the SEBI guidelines vide SEBI CIRCULAR NO. SEBI/HO/CFD/CMD/CIR/P/2017/004, Dated January 5, 2017 on Guidance Note on Board Evaluation or by such other procedure as the Committee may deem fit for evaluation process.
Below Matrix to be follow while performance evaluation of the Directors and the Board as a whole:
|MATRIX FOR THE EVALUATION OF BOARD AND THE DIRECTORS|
|1.||Criteria for the Evaluation of a Board as a whole
1. Board Composition & Quality;
2. Board and Management Relations;
3. Board Meeting& Procedures;
4. Board Strategy and Risk Management;
5. Grievance Redressal for Investors;
6. Conflict of Interest;
7.Stakeholder Value and responsibility;
8. Corporate Cultures & Values;
9. Review of Board Evaluation;
10.Facilitation of Independent Directors;
|2.||Criteria for the Evaluation of Board Committee
1. Structure of the Committee and meetings;
2. Mandate & Composition;
3. Effectiveness of the committee;
4. Independence of the Committee from the Board;
5. Contribution to decisions of the Board;
|3.||Criteria for Non- Executive Directors
1. Knowledge & Skill
2. DILIGENCE & PARTICIPATION
4. Managing Relationship
|4.||Criteria for Independent Directors
2. Knowledge & Participation
|5.||Criteria MD & WTD
3. Value Creation
4. Governance & Compliance
Rankings stands as under:-
4. Very Good
Due to reasons for any disqualification mentioned in the Companies Act, 2013, rules made there under or under any other applicable Act, rules and regulations or as per the employment agreement (if any) the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management Personnel subject to the provisions and compliance of the said Act, rules and regulations.
The Director, KMP and Senior Management Personnel shall retire as per the applicable provisions of the Companies Act, 2013 and the prevailing HR policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management Personnel in the same position / remuneration or otherwise even after attaining the retirement age, for the benefit of the Company, subject to necessary compliances.
(i). Remuneration of Managing Director / Whole Time Director / Non-Executive Director / Independent Director (“Collectively referred as ‘Directors’)
The remuneration / compensation / commission etc. to the Managing Director / Whole-time Director, shall be recommended by the Nomination and Remuneration Committee to the Board for approval and further recommendation to the Shareholder’s for their approval. The remuneration / compensation / commission etc. shall be subject to the prior/post approval of the shareholders of the Company and Central Government, wherever
The remuneration and commission to be paid to the Managing Directors /Whole-time Director shall be as per approval of shareholders of Company or Central Government in terms of the provisions of the Companies Act, 2013, and the rules and Schedule made thereunder, as applicable from time to time.
Where any insurance is taken by the Company on behalf of its Directors, KMP and any other employees for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel. Provided that if such person is proved to be guilty, the premium paid on such insurance shall be treated as part of the remuneration.
The Managing Director / Whole-time Director shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee. The breakup of the pay scale and quantum of perquisites including, employer’s contribution to P.F, pension scheme, medical expenses, club fees etc. shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders and Central Government, wherever required.
The performance bonus for Managing Director / Whole time Director of the Company shall be recommended by the Committee based on key performance indicators, ie. Policy framework, Risk Management, disbursement, growth in Asset Under Management, Branch network expansion, diversification of product lines, Profits, reduction in costs of borrowing asset, quality and innovations. The performance shall be reviewed annually on above and other parameters as the Committee may recommend further.
If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managing Director or Whole-time Director in accordance with the provisions of Schedule V of the Companies Act, 2013 and if it is not able to comply with such provisions, with the previous approval of the Central Government.
The Directors may receive remuneration by way of fees for attending meetings of Board or Committee thereof provided that the amount of such fees shall not exceed such amount as may be recommended by Nomination and Remuneration Committee and approved by the Board from time to time.
The Directors may receive Commission within the monetary limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Companies Act, 2013 and rules made thereunder.
The Managing Director / Whole Time Director shall be entitled to get stock options of the Company which shall form party of their remuneration. An Independent Director shall not be entitled to any stock option of the Company.
Remuneration of KMPs (other than Managing Director / Whole time Directors) i.e. Chief Financial Officer/ Chief Executive officer / Company Secretary and other Senior Management Personnel shall be decided by the Chairperson in consultation with Managing Director/Whole Time Director.