Policy on RPT

Prolife Industries Limited

Policy on Related Party Transactions


  1. Preamble:

The  Board   of  Directors  (the  “Board”)  of  Prolife Industries  Limited  (the “Company” or “PIL”),  has  adopted the  following policy  and  procedures with  regard to the Related  Party  Transactions as defined below.  The Audit Committee shall review and may propose amendments to this policy as may be required.

The policy will be applicable to the Company. This policy is to regulate transactions between the Company and its related parties based on the laws and regulations applicable on the company.

  1. Objective:

This policy  is framed as per  the  requirement of SEBI (Listing  Obligations and  Disclosure Requirements) Regulations, 2015 (“Listing  Regulations”) and intended to ensure the proper approval and  reporting of transaction between the  Company and  its  Related  Parties  as determined under Listing  Regulations 2015, Companies Act,  2013 and  rules  prescribed there under (“Act”),  and   any  other   laws  and   regulations  as  may  be  applicable to  the Company.

The  Company is  required to  disclose  in  its  Annual Financial Statements and  Directors Report,  certain  transactions between the  Company and  Related  Parties  as well  as policy relating thereto. The Related Party Transaction Policy shall be disclosed on the website of the Company and a web link thereto shall be provided in the Annual Report.

  1. Definitions:

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

“Associate” means a Company as defined under section 2(6) of the Companies Act, 2013 and as defined by Accounting Standard (AS) 23, “Accounting for Investments in Associates in Consolidated Financial Statements” and by Accounting Standard (AS) 18, “Related party disclosures”.

“Audit Committee or Committee” means   the Committee of the Board formed under section  177 of the Act and Regulations 18 of Listing Regulations 2015.

“Board” means Board of Directors of the Company.

“Control”  means  control  as defined in Section  2 (27) of the  Act and  shall  have  the  same meaning as defined in SEBI (Substantial Acquisition of Shares and  Takeovers) Regulations, 2011.

“Key Managerial Personnel” shall mean the officers of the Company as defined in Section 2(51) of the Act.

“Policy” means Related Party Transaction Policy.

“Material Related  Party Transaction”  means  a transaction with  a related party where 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.

“Related Party” as defined under Listing Regulations 2015 is as under –

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.

Section 2(76) of the Companies Act, 2013, as referred above, defines Related Party as —

(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 and 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;  [Except   advice,   directions  or   instructions  given   in  a professional capacity]

(vii)      Any person on whose advice, directions or instructions a director or manager is accustomed   to   act. [Except    advice,    directions or   instructions   given    in   a professional capacity]

(viii)     Any company which is a holding, subsidiary or an associate company of such company; or a subsidiary of a holding company to which it is also a subsidiary.

(ix)   A director other  than  an Independent Director or Key Managerial Personnel of the holding Company or his relative with reference to a Company.

“Relative”: with reference to any person, means who is related to another, if:- (i)        They are members of a Hindu Undivided Family;

(ii)        They are Husband or wife or

(iii)      One person is related to the another in the following manner, namely:-

a. Father, includes step-father.

b. Mother, includes step-mother.

c. Son includes step-so

d. Son’s wife.

e. Daughter.

f. Daughter’s husband.

g.Brother includes step-brother.

h. Sister includes step-sister.

“Related Party Transactions”

Related party transaction” means a transfer of resources, services  or obligations between a listed entity  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:.

Explanation: A transaction with a related party shall be construed to include single transaction or a group of transactions in a contract.

As per Section 188 of the Act shall mean contracts or arrangements with related party with respect to:-

(a) Sale, purchase or supply of any goods or materials;

(b) Selling or otherwise disposing of, or buying, property of any kind;

(c) Leasing of property of any kind;

(d) Availing or rendering of any services;

(e) Appointment of any agent for purchase or sale of goods, materials, services or property;

(f) Such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company; and

(g) Underwriting the subscription of any securities or derivatives thereof, of the Company.

“Collectively the Related Party Transaction shall constitute the above.”

Transactions in “ordinary course of business” shall mean and include-

-     Transactions that are entered in the normal and usual course of business and are identical to the business of the company.

-    Transactions that is reasonable in the context of the business of the company.

-    Transactions that are part of the standard industry practice.

  1. Identification of Related Party:

Each director and  Key Managerial Personal is responsible for providing notice to the Board or Audit Committee regarding persons and  entities  to be considered as “related Party” by virtue  of  his/her  being   Director/KMP  in  the  entity   or  holding  certain   shareholding percentage. Such notice  shall  be provided to the company at the time  of appointment and also  at the  time  of first  board meeting in every  financial year  and  whenever there  is any change in the disclosures already made.

  1. Identification of Potential Related Party Transactions:

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  reasonably request. Board/Audit Committee will determine whether the transaction does, in fact, constitute a Related Party Transaction requiring compliance with this policy.

  1. Terms of the Policy:

6.1     All Related Party Transactions must be reported to the Audit Committee and referred for approval by the Committee in accordance with this Policy.

6.2     All  the   Related   Party   Transactions proposed  to  be  entered  shall   require  prior approval of  the  Audit Committee including the  transactions to  be  entered in  the ordinary course  of business. The Audit Committee shall accordingly recommend the Related Party Transaction for the approval of Board of Directors/ Shareholders as per the terms of this policy.

6.3     All the Related Party  Transactions prescribed under Section  188 of Companies Act,

2013  and   within  the   threshold  limits   prescribed  under  rule   15  sub   rule(3)   of Companies (Meetings of Board and its Powers) Second Amendment Rules, 2014, shall along  with  the Audit Committee Approval shall also require approval of the Board of Directors.

6.4     All   the   Material  Related    Party    Transactions  and   Related    Party    Transactions, exceeding the  threshold limits  prescribed under rule  15 sub  rule(3)  of Companies (Meetings of Board  and  its  Powers) Second  Amendment Rules,  2014 shall  require prior  approval of the Audit Committee, Board  of Directors and  Shareholders of the Company by way of Special Resolution.

6.5     However, Related   Party  Transactions which  are  either  not  at  arm’s  length   or  not undertaken in the ordinary course  of business shall require the prior  approval of the Audit  Committee,  Board   of  Directors  and   the   Shareholders  by  way   of  special resolution  in  order  to  allow   the  Company  to  enter   into arrangements/transactions/contracts with  related party of the  Company as per  the prescribed provisions of Companies Act, 2013 along  with  the rules  made  there under and the Listing Agreement.

  1. Review and Approval of Related Party Transactions:

All  related party  transactions must   be  reported to  the  Audit  Committee for  its  prior approval in accordance with  this  policy.  The Committee shall review the transaction and report the same for approval of the Board and shareholders, if required, in accordance with this policy.

Approval of Audit Committee

7.1    All Related Party Transactions shall require prior approval of the Audit Committee either at a meeting or by resolutions by circulations. Any member of the committee. who   has   potential  interest  in   any   related  party  transaction  will   abstain  from discussion and voting on the approval of the related party transaction.

7.2    Audit Committee shall have all rights to call for information/documents in order to understand the scope of the proposed related party transactions.

  1. 7.3    The Audit Committee may grant omnibus approval for the proposed Related Party

Transaction subject to the following conditions:

a. The Audit Committee shall lay down the criteria for granting 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;

b. The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of the Company;

c. Such omnibus approval shall specify the following:

- Name(s) of the Related Party;

- Nature of the 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.

d. In such cases where the need for Related  Party  Transaction cannot be foreseen and details  as  required  above   are  not  available,  the  Audit  Committee may   grant omnibus approval for such  transactions subject  to their  value  not  exceeding Rs. 1 crore per transaction;

e. The Audit committee shall review, at  least  on  a  quarterly basis,  the  details of Related  party transactions entered into  by  the  Company pursuant to each  of the omnibus approval given;

f. Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.

7.4  All material related party transactions will be placed for approval of the shareholders of the Company through special Resolution and the related parties shall abstain from voting on such resolutions.

Approval of Board of Directors

7.5    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 the Board  to approve a Related  Party  Transaction, then the Board  shall consider and  approve the Related  Party  Transaction at a meeting 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.

7.6    All the related party transactions prescribed under Section  188 of the Act, which  are not  in the  ordinary course  of business or not  at Arm’s  Length  Basis and  all material related party  transactions shall  be  brought before  the  Board  and  the  Board  shall consider and approve the related party transaction at a meeting.

7.7    Any  member of the  Board  who  is interested or has  potential interest (as mentioned under section 184(2) of the Act), in any related party transaction shall not be present at the meeting during discussions on the subject matter of the resolution relating to such related party transaction.

Approval of Shareholders

7.8    All the Material Related Party Transactions shall require approval of the shareholders through special resolution and the Related Parties shall abstain from voting on such resolution. The related parties referred here shall abstain from voting irrespective of whether the entity is a party to the particular transaction or not.

7.9    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 shall,  subject  to  the  limits  mentioned in  Rules  15(3) of the  Companies (Meeting of Board  and   its  Power)   Rules,  2014,  also  require the  approval of  the  shareholders through special  resolution and  the  Related  Parties  shall  abstain from  voting on such resolution.

The  ‘Related  Party’  referred here  has  to  be  construed with  reference only  to  the contract or arrangement for which,  the said  special  resolution is being  passed. Thus, the term  ‘Related Party’ in the given  context,  refers  to only such  related party as may be a related party in the  context  of the  contract or arrangement for which,  the  said resolution is being passed.

Transactions that,  require previous approval of  Shareholders of  the  Company, as prescribed under rule  15(3) of the  Companies (Meeting of Board  and  its  Powers ) Rules, 2014, includes the transactions/ contracts/ arrangements as follows :

1)  Sale, purchase or supply of any goods  or materials, directly or through appointment of agent,  exceeding 10% of the turnover of the company or Rs. 100 crore, whichever is lower,  as mentioned in clause  (a) and  clause  (e) respectively of sub-section (1) of section 188 of Companies Act, 2013;

2)  Selling or otherwise disposing of or buying property of any kind,  directly or through appointment of agent,  exceeding 10% of net worth of the company or Rs. 100 crore, whichever is lower,  as mentioned in clause  (b) and  clause  (e) respectively of sub- section of section 188 of Companies Act, 2013;

3)  Leasing  of  property of  any  kind  exceeding ten  per  cent  of  the  net  worth of the company or 10% of turnover of the company or Rs. 100 crore, whichever is lower,  as mentioned in clause (c) of sub-section (1) of section 188 of Companies Act, 2013;

4)  Availing or  rendering of any  services,  directly or  through appointment of agent, exceeding 10% of the turnover of the company or Rs. 50 crore, whichever is lower,  as mentioned in clause (d) and clause (e) respectively of sub-section (1) of section 188 of Companies Act, 2013.

These limits shall however, apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.

7.10 However, In case of wholly owned subsidiary, the special resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between wholly owned subsidiary and holding company.

Transaction not requiring approval of Audit Committee, Board or Shareholders

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

i. 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.

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

Transaction not requiring approval of Board or Shareholders

7.12    Pursuant to clarification provided in circular No.30/2014 dated 17th  July, 2014 of Ministry of Corporate Affairs,  Contracts entered into  by companies, after  making necessary  compliances under  Section   297  of  the   Companies  Act,  1956,  which already came into effect before the commencement of Section 188 of the Companies Act, 2013, will not require fresh approval under the said section  188 till the expiry  of the  original term  of such  contracts. Thus,  if any  modification in  such  contract is made  on or after  lst  April,  2014, the requirements under section  188 will have  to be complied with.

8    Criteria for approval of a Related Party Transaction by the Board / Audit


8.1            To review a Related  Party  Transaction, the Board  / Audit Committee will be provide  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:

  1. The name of the related party and nature of relationship;
  2. 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;

  1. iv. Any advance paid or received for the contract or arrangement, if any;
  2. v. the manner of determining the  pricing and  other  commercial terms,  both included as part  of contract and not considered as part  of the contract;
  3. v 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.

8.2    In determining whether to approve a Related  Party  Transaction, the Board/ Audit Committee shall  consider the  following factors,  amongst others,   to  the  extant relevant to the Related  Party  Transaction:-

  1. Whether the  transaction is in the   ordinary course   of business of the company.
  2. Whether the terms  of the  Related  Party  Transaction are  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;

iii.   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;

iv. Whether the Related Party Transaction would affect the independence of the directors/KMP;

v. Whether the proposed transaction includes any  potential reputational risk issues  that  may  arise  as  a  result   of  or  in  connection with  the  proposed transaction;

vi. 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

vii. 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.

9    Disclosures:

9.1       Every   Director  of  a  Company  who   is  in  any   way,   whether  directly  or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into—

(a)       With  a body  corporate in which  such  director or such  director in association with  any  other  director, holds  more  than  two  per  cent. shareholding of that body  corporate, or  is a promoter, manager, Chief  Executive  Officer  of that body  corporate; or

(b)       With  a firm  or  other  entity  in  which,  such  director is a partner, owner or member, as  the  case  may  be,  shall  disclose   the  nature of  his  concern   or interest at the meeting of the Board  in which  the contract or arrangement is discussed and shall not participate in such meeting:

Provided that where any director who is not so concerned or interested at the time of entering into such contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the first meeting of the Board held after he becomes so concerned or interested.

9.2       All  Directors/  KMPs  are  required to  disclose  the  entities  in  which  they  or their relatives are or deemed to be interested, in the prescribed form.

9.3       Each Director and KMP of the Company shall promptly notify the Company Secretary of the Company of any material transaction or Relationship that could reasonably be expected to give rise to any conflict of interest.

9.4       The Company shall maintain Register pertaining to related party transactions in the prescribed form.

9.5       The related party transaction entered into with the related party/ies shall be disclosed in the   Director Report / Annul Report   as per   the   disclosure requirement of the Act.

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

9.7       Details  of  all  material transactions with  related parties shall  be  disclosed, quarterly in the  Compliance Report  on  Corporate Governance., as required under listing  agreement.

10   Ratification:

10.1       Any   Related   Party   Transaction entered  into   without  obtaining the  prior approval of the  Audit/  Board/  Shareholders(respective authority/ies)  may be ratified, subject  to the  applicable provisions of the  Companies Act,  2013 and  the  Listing  Regulations 2015, if post  review of  the  said  transaction / contract, the  appropriate authority is  satisfied, that  the  said  Related   Party Transaction is not  detrimental to the  interest of the  Company, however, the appropriate authority may  also  ratify  such  transaction or contracts, with  or without the modification(s).

10.2       Where  any  contract or  arrangement is  entered into,  without obtaining the consent of the Audit Committee, Board or approval by a Special Resolution in the General Meeting and  if it is not ratified by the Board  or, as the case may be, by the  shareholders at a meeting within three  months from  the  date  on which   such   contractor  arrangement  was   entered  into,   such   contract  or arrangement shall be voidable at the option of the Board.

10.3       If the appropriate authority decides, not to approve a particular transaction, it may  require the  Related  Party  to  reimburse the  benefits  which  might  have accrued to  it  and/ or  indemnify the  Company with  regard to  the  subject Related    Party    Transaction  which    is   not   approved  by   the   appropriate authority.

10.4       However the  Related  Party  transaction which  are  entered into  without the approval of the  appropriate authority and  subsequently not  ratified by  the appropriate authority, the  applicable provisions of the  Companies Act, 2013 and Listing Regulations 2015, shall apply.

11 Amendments to the Policy:

11.1       The Board of Directors on its own and / or as per the recommendations of Audit Committee can amend this Policy, as and when deemed fit. Any  or all provisions  of  this   Policy   would  be  subject   to  revision  /amendment  in accordance with  the  Rules,  Regulations, Notifications etc.  On the subject as may be issued by relevant statutory authorities, from time to time.

11.2      In case of any amendment(s), clarification(s), circular(s) etc.  Issued by the relevant authorities, not being consistent with the provisions laid down under this Policy, then   such   amendment(s), clarification(s), circular(s)  etc.  shall prevail upon the  provisions here under and  this  Policy  shall  stand amended accordingly from  the  effective  date  as laid  down under such  amendment(s), clarification(s), circular(s) etc.

This Policy will be communicated to all operational employees and other concerned persons of the Company and shall be placed on the website of the company.