SRI VIJAYARAM HIRE PURCHASE AND LEASING FINANCE LIMITED

ஸ்ரீ விஜயராம் ஹையர் பர்ச்சேஸ் & லீசிங் பைனான்ஸ் லிமிடெட்

GUIDELINES ON CORPORATE GOVERNANCE

(Approved in the Board Meeting held on 25.06.2022)

SRI VIJAYARAM HIRE PURCHASE & LEASING FINANCE LIMITED

INTERNAL GUIDELINES ON CORPORATE GOVERNANCE

COMPANY PHILOSOPHY

The Company recognizes its role as a corporate citizen and endeavours to adopt the best practices and standards of Corporate Governance through transparency in business ethics, accountability to its customers, Government and others. The Company’s activities are carried out in accordance with good corporate practices and the Company is constantly striving to better them and adopt the best practices. The Company’s philosophy on Corporate Governance is founded upon a rich legacy of fair, ethical and transparent governance practices.

RBI GUIDELINES ON CORPORATE GOVERNANCE

In order to enable NBFC’s to adopt best practices and greater transparency in their operations, Reserve Bank of India has, on June 30^th, 2015, issued guidelines on Corporate Governance. In pursuit of the aforesaid guidelines, the Company has framed the following guidelines on Corporate Governance.

1). BOARD OF DIRECTORS

The Board of Directors along with its Committees shall provide leadership and guidance to the Company's management and direct, supervise and review the affairs and performance of the Company. As per the Company's Articles of Association.

The role of the board is to determine the overall strategic direction and management of the Company, including monitoring of the performance. The Board is responsible to the shareholders and its conduct is determined by various provisions of the laws and the Articles of Association of the Company. In performing its duties, the Board meets regularly and act in the best interests of the Company including its shareholders, employees, customers and creditors.

The Board’s primarily responsibility is on the direction, control and governance of the Company and in particular, to articulate and commit to a corporate philosophy and governance that will shape the level of risk adoption, standards of business conduct and ethical behaviour of the Company. The Board through this policy has set a clear and transparent policy framework for translation of the corporate objectives.

The BoD consists of 6 directors, of which four are Executive directors, two Independent directors.

S.No	Name of Director	Designation
1	A.Kannan	Chairman & Managing Director
2	S.S.Selvaraju	Director
3	S.Jayaraman	Director
4	S.Selvaraj	Director
5	G.Sundararajan	Independent Director

The Board shall periodically review Compliance Reports of all laws applicable to the Company prepared by the Company as well as steps taken by the Company to rectify instances of non-compliance.

2). BOARD MEETINGS

Meetings of the BoD shall be held atleast four times a year, with a minimum one meeting in a quarter.

The minimum information to be statutorily made available to the Board shall be furnished to the Directors. The Board shall constitute a set of Committees with specific terms of reference/scope to focus effectively on the issues and ensure expedient resolution of diverse matters. The Committees shall operate as empowered agents of the Board as per their terms of reference. The minutes of the meeting of all committees of the Board shall be placed before the Board for discussions/noting.

3). CODE OF CONDUCT

The Company shall adopt a Code of Conduct for its senior management including the Managing Director and also for its Non-Executive Directors.

4). COMMITTEES OF THE BOARD

The Board of Directors shall constitute various Committees which will enable the Board to deal with specific areas / activities that need a closer review and to have an appropriate structure to assist in the discharge of its duties and responsibilities.

The Committees shall operate as per the terms of reference approved by the Board. The minutes of the meetings of all Committees of the Board shall be placed before the Board for noting in subsequent meeting. The details of some of the important Committees of the Company are as under:

4(a). AUDIT COMMITTEE

The Company shall have in place the Audit Committee in accordance with the Section 177 of the Companies Act, 2013 and the Rules framed thereunder and the provisions of Para 3 of the Non- Banking Financial Corporate Governance (Reserve Bank) Directions, 2015.

The Audit Committee is constituted by the Board with intent to assist the Management in:

a) Review significant accounting and reporting issues, including complex or unusual transactions and highly judgemental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.

b) Review the annual financial statements, and consider whether they are complete, consistent with information known to committee members, and reflect appropriate accounting principles.

c) Review with management and external auditors all matters required to be communicated to the committee under generally accepted auditing standards.

d) Consider the effectiveness of the Company’s internal control system, including information technology security and control.

e) Understand the scope of internal and external auditor’s review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management’s response.

f) Review the statement of significant related party transactions submitted by the management, including the ‘significant’ criteria/thresholds decided by the management.

g) Discuss with the management, the company’s policies with respect to risk assessment and risk management, including appropriate guidelines to govern the process, as well as the Company’s major financial risk exposures and the steps management has undertaken to control them.

h) Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow up (including disciplinary action) of any instances of non-compliance.

Composition:

The Audit Committee shall comprise of at least three directors as members of the Committee and majority shall be independent directors (more than 50% of the members of audit committee shall be independent directors)

All members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise.

Chairman:

The Committee shall appoint one of its members as the Chairman of the Committee. However, as a matter of good governance, one of the Independent Directors may be appointed as the Chairman of the Committee.

Quorum:

The quorum necessary for transacting business at a meeting of the Committee shall be two members or one-third of the members of the Audit Committee; whichever is greater.

Meetings:

The Committee will meet at least four times in a year for quarterly meetings and additional meetings if necessary.

The committee may meet in person from time to time. Under normal circumstances, meetings of the committee shall be attended by the Chairman and director, the head of Statutory Audit, Internal Audit within the Company. The committee may at its discretion require the attendance of such other person from within the Company at committee meetings.

Minutes:

The Company will maintain minutes of the meeting of the committee, which will be submitted to the Board for adoption and record.

4(b). NOMINATION OR REMUNERATION COMMITTEE

The Company shall have in place the Nomination and Remuneration Committee in accordance with the provisions of Para 3 of the Non- Banking Financial Corporate Governance (Reserve Bank) Directions, 2015 and Section 178 of the Companies Act, 2013 and the Rules framed thereunder.

The Nomination and Remuneration Committee shall have the powers and duties conferred upon it in compliance with the provisions of Section 178 of the Act, RBI guidelines and such other duties, obligations and powers as may be prescribed by the Nomination and Remuneration Charter.

Terms of reference of the Nomination committee include the following:

a) Identifying and recommending to the Board, nominees for membership or re-election to the Board including the Chief executive officer;

b) Identifying and assessing the necessary and desirable competencies and characteristics for Board membership and regularly assessing the extent to which those competencies and characteristics are represented on the Board;

c) Developing and implementing processes to identify and assess necessary and desirable competencies and characteristics for Board members;

d) Ensuring succession plans are in place to maintain an appropriate balance of skills, experience and expertise on the Board and reviewing those plans.

Chairman:

The Committee shall appoint one of its members as the Chairman of the Committee.

Quorum:

Minimum two (2) members, of which one shall be Independent Director, present in person or by using any technology, shall constitute a quorum. The quorum must be present at all times during the meeting.

Meetings:

The meeting of the Committee shall be held at such regular intervals as may be required but atleast once in a financial year to review and evaluate the performance of directors of the Company. The Committee may meet in person or through other methods like video conferencing, audio conferencing etc. as may be permitted under the Act from time to time.

Minutes:

The Committee must keep minutes of its meetings. Minutes of each Committee meeting must be included in papers for the next full Board meeting after each meeting of the Committee.

4(c). RISK MANAGEMENT COMMITTEE:

The Company shall have in place the Risk Management Committee in accordance with the provisions of Para 3 of the Non- Banking Financial Corporate Governance (Reserve Bank) Directions, 2015.

The Risk Management Committee is a committee constituted by, and accountable to, Sri Vijayaram hire purchase & leasing finance limited. The primary responsibilities are to:

a) Discuss with senior management, the Company’s Enterprise Risk Management (ERM) and provide oversight as may be needed;

b) Ensure it is apprised of the most significant risks along with the action management is taking and how it is ensuring effective ERM;

c) Reviewing risk disclosure statements in any public documents or disclosures.

Chairman:

The Committee shall appoint one of its members as the Chairman of the Committee.

Composition:

The Risk management committee has been established by resolution of the Board. It shall comprise of three Directors at least one of them should be Independent Director.

Quorum:

Minimum of two members shall constitute a Quorum.

Meetings:

The Risk Management Committee of the Board would meet at least two times annually, or more frequently as circumstances dictate to review the risk management policies and practices.

Minutes:

The Company will maintain minutes of the meeting of the Committee, which will be submitted to the Board for adoption and record.

4(d). ASSET LIABILITY MANAGEMENT COMMITTEE

The Asset Liability Management Committee (ALM Committee) shall be a sub committee appointed by Board to monitor the asset liability gap and form strategies to mitigate the risks associated with the business of the Company.

The terms of reference of Asset Liability Management Committee (ALM) are as follows:

The ALM Committee is responsible for assisting the Board of Directors in Balance Sheet planning from risk return perspective including the strategic management of interest and liquidity risk. Its function includes –

a) Liquidity risk management.

b) Management of market risks.

c) Funding and capital planning.

d) Profit planning and growth projection.

e) Forecasting and analysing ‘What if scenario’ and preparation of contingency plans.

Chairman:

The Committee shall appoint one of its members as the Chairman of the Committee.

Composition:

The Committee shall consist of such number of members as may be determined by the Board comprising of at least three officials, including Chairman and Managing Director (CMD).

Quorum:

The quorum for holding the meetings of ALCO would be 50% of the strength of the ALCO at any point of time, including the Chairman of the Committee.

In case 50% works out to a fraction it would be rounded-off to the next higher number.

Meetings:

The ALCO would meet at such intervals depending on the business requirements, but at least once in every quarter.

Minutes:

The Company will maintain minutes of the meeting of the Committee, which will be submitted to the Board for adoption and record.

5). FIT & PROPER CRITERIA

The Company has put in place a policy laying down the Fit & Proper Criteria on the lines of the guidelines contained in the RBI Master Directions NBFC, 2016 with the approval of the Board of Directors for ascertaining the fit and proper criteria of the directors at the time of appointment and on a continuing basis.

All Directors shall adhere to the Deed of Covenant signed by them pursuant to the RBI requirements. They shall at all times comply with the “Fit & Proper” criteria prescribed by RBI.

6). ROTATION OF STATUTORY AUDITORS/AUDIT PARTNER’S

The Company shall ensure rotation of the partner/s of the Chartered Accountant firm conducting the audit once in every three years so that same partner does not conduct the audit of the company continuously for more than a period of three years. However, the partner so rotated may be eligible for conducting the audit after a cooling period of three years, if the Company so decides. The Company shall incorporate appropriate terms in the letter of appointment of the firm of auditors and ensure its compliance.

These guidelines on CG were placed in the board meeting held on 25.06.2022 discussed, deliberated and duly approved.