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Related Party Transactions

Objectives

Related Party Transactions have been one of the major areas of focus for the corporate governance reforms being initiated by the Indian legislature.

The changes introduced in the Corporate Governance norms through the Companies Act, 2013 and Clause 49 of the Listing Agreement (as applicable) require the companies to have enhanced transparency and due process for approval of the Related Party Transactions.

The Board of Directors (the “Board”) of Vaswani Industries Limited has adopted Related Party Transactions Policy (this “Policy”) to set forth the procedures under which the transactions with Related Parties shall be considered for approval/ratification.

Identification of Potential Related Party Transactions

Every Director, Key Managerial Personnel and Management Council Member of the Company is responsible for providing notice to the Board or the Audit Committee, of any potential Related Party Transaction involving him/her or his/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.

As a policy the Directors are required from time to time to declare and disclose their concerns or interests in any company or companies or bodies corporate at the first Board meeting in every financial year and subsequently whenever there is any change in disclosures. In addition, the Directors shall ensure that any business transactions entered into between Vaswani Industries Limited and themselves comply with the terms of this Policy.

The Company prefers to receive such notice of any potential Related Party Transaction well in advance so that the Audit Committee/Board has adequate time to obtain and review information about the proposed transaction.

Review and Approval Of Related Party Transactions

The Audit Committee is required to approve all related party transactions which are at arm’s length and in ordinary course of business shall be periodically disclosed to the Audit Committee/Board of Directors. However, in case, there are any transactions which are not at arm’s length or which are concluded to be not in ordinary course of business, the Company would need the following additional approvals as mentioned here under:

In case of transactions which are ‘material’ in nature and/or not in the ordinary course of business or not at arm’s length, the management shall present the following information to the Audit Committee/Board of Directors for approval of those Related Party Transactions as per the provisions of the Companies Act, 2013:

a. name of the related party and nature of relationship
b. the nature, duration of the contract and particulars of the contract or arrangement;
c. the material terms of the contract or arrangement including the value, if any;
d. any advance paid or received for the contract or arrangement including the value, if any;
e. the manner of determining the pricing and other commercial terms, both included as part of contract and not considered as of the contract;
f. 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; and
g. any other information relevant or important for the Board to take a decision on the proposed transaction.

After reviewing such information, the members of the Audit Committee (without the participation of the interested Committee member(s), if any) shall approve or disapprove such transactions.

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

i. Any transaction that involves paying 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 Company and all holders of such securities receive benefits pro rata as the Related Party.

Related Party Transactions Not Approved Under This Policy

In the event the Company becomes aware of any transaction with a Related Party that has not been approved under this Policy, the matter shall be reviewed by the Committee. The Committee shall consider all the relevant facts and circumstances regarding the Related Party Transaction (including reasons of failure to report such transaction) and evaluate all options available to the Company, including ratification, revision or termination of the Related Party Transaction.

Disclosures

The Company shall make the disclosures as required under the Companies act 2013 and/or any rules & regulations prescribed by regulatory authorities.

Policy Review

The Audit Committee may review this policy from time to time and recommend any changes to the Board for approval.

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