Nidhi Mercantiles Limited

CODE OF CONDUCT FOR BOARD OF DIRECTORS:

 

The Code is a guide to professional conduct for Board of Directors (including independent directors) and senior management. Adherence to these standards by Board of Directors (including independent directors) and senior management and fulfillment of their responsibilities in professional and faithful manner will promote confidence of the investment community, particularly the minority shareholders, regulators and companies in the institution of Board of Directors.

 

GUIDELINES OF PROFESSIONAL CONDUCT:

 

The Board of Directors and Senior Management shall:

 

  • uphold ethical standards of integrity and probity;
  • act objectively and constructively while exercising their duties;
  • exercise their responsibilities in a bona fide manner in the interest of the company;
  • devote sufficient time and attention to their professional obligations for informed and balanced decision making;
  • not allow any extraneous considerations that will vitiate their exercise of objective independent judgment in the paramount interest of the company as a whole, while concurring in or dissenting from the collective judgment of the Board in its decision making;
  • not abuse their position to the detriment of the company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person;
  • In case Independent Directors, refrain from any action that would lead to loss of their independence;
  • where  circumstances  arise  which  make  a  director  loose  his  independence,  the concerned director must immediately inform the Board accordingly;
  • assist the company in implementing the best corporate governance practices.

 

ROLE AND FUNCTIONS:

 

The Board of Directors and Senior Management shall:

 

  • help  in  bringing  an  independent  judgment  to bear  on  the  Board’s  deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct;
  • bring an objective view in the evaluation of the performance of board/independent director and management;
  • scrutinize  the  performance  of  board/  independent  director  and  management  in meeting upon the agreed goals and objectives and monitor the reporting of performance;
  • satisfy themselves on the integrity of financial information and that financial controls and the systems of risk management are robust and defensible;
  • safeguard the interests of all stakeholders, particularly the minority shareholders;
  • balance the conflicting interest of the stakeholders;
  • determine appropriate levels of remuneration of executive directors, independent directors, key managerial personnel and senior management and have a prime role in appointing and where necessary recommend removal of executive directors, key managerial personnel and senior management;
  • moderate and arbitrate in the interest of the company as a whole, in situations of conflict between board/ management and shareholder’s interest.

 

DUTIES:

The Board of Directors and Senior Management shall:

 

  • undertake appropriate induction and regularly update and refresh their skills, knowledge   and familiarity with the company;
  • seek appropriate clarification or amplification of information and, where necessary, take and follow appropriate professional advice and opinion of outside experts at the expense of the company;
  • strive to attend all meetings of the Board of Directors/Independent directors and of the Board committees of which they are members;
  • participate constructively and actively in all meetings of the Board of Directors/Independent directors and the committees of the Board in which they are chair-persons or members;
  • strive to attend the general meetings of the company;
  • where they have concerns about the running of the company or a proposed action, ensure  that  these  are  addressed  by  the  Board/independent  directors and  senior management to the extent that they are not resolved, insist that their concerns are recorded in the minutes of the Board meeting;
  • keep themselves well informed about the company and the external environment in which it operates;
  • not  to  unfairly  obstruct  the  functioning  of  an  otherwise  properly  conducted
    Board/independent directors or committee of the Board meetings;
  • pay  sufficient  attention  and  ensure  that  adequate  deliberations  are  held  before approving related party transactions and assure themselves that the same are in the interest of the company and stakeholders at large;
  • ascertain  and  ensure  that  the  company  has  an  adequate  and  functional  vigil mechanism and to ensure that the interests of a person who uses such mechanism are not prejudicially affected on account of such use;
  • report concerns about unethical behavior, actual or suspected fraud or violation of the company’s code of conduct or ethics policy;
  • acting  within  their  authority,  assist  in  protecting  the  legitimate  interests  of  the company, stakeholders and its employees;
  • not disclose confidential information, including commercial secrets, technologies, advertising and sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly approved by the Board or required by law.

 

MANNER OF APPOINTMENT OF INDEPENDENT DIRECTORS:

 

  • Appointment process of independent directors shall be independent of the company management; while selecting independent directors the Board shall ensure that there is appropriate balance of skills, experience and knowledge in the Board so as to enable the Board to discharge its functions and duties effectively.
  • The appointment of independent director(s) of the company shall be approved at the meeting of the shareholders.
  • The explanatory statement attached to the notice of the meeting for approving the appointment of independent director shall include a statement that in the opinion of the Board, the independent director proposed to be appointed fulfills the conditions specified in the Act and the rules made there under and that the proposed director is independent of the management.
  • The appointment of independent directors shall be formalized through a letter of appointment, which shall set out:
  • the term of appointment;
    - the  expectation  of  the  Board  from  the  appointed  director;  the  Board-level committee(s) in which the director
      is expected to serve and its tasks;
    - the   fiduciary   duties   that   come   with   such   an   appointment   along   with accompanying liabilities;
    - provision for Directors and Officers (D and O) insurance, if any;
    - the  Code  of  Business  Ethics  that  the  company  expects  its  directors  and employees to follow;
    - the list of actions that a director should not do while functioning as such in the company; and
    - the remuneration,  mentioning  periodic  fees,  reimbursement  of  expenses  for participation in the Boards and
      other meetings and profit related commission, if any.
    - The terms and conditions of appointment of independent directors shall be open for inspection at the registered
      office of the company by any member during normal business hours.
    - The terms and conditions of appointment of independent directors shall also be posted on the company’s
       website.

 

RE-APPOINTMENT OF INDEPENDENT DIRECTORS:

 

  • The  re-appointment  of  independent  directors  shall  be  on  the  basis  of  report  of performance evaluation.

 

RESIGNATION OR REMOVAL OF INDEPENDENT DIRECTORS:

 

  • The resignation or removal of an independent director shall be in the same manner as is provided in sections 168 and 169 of the Companies Act.
  • An independent director who resigns or is removed from the Board of the company shall be replaced by a new independent director within a period of not more than one hundred and eighty days from the date of such resignation or removal, as the case may be.
  • Where the company fulfills the requirement of independent directors in its Board even without filling the vacancy created by such resignation or removal, as the case may be, the requirement of replacement by a new independent director shall not apply.

 

SEPARATE MEETINGS OF INDEPENDENT DIRECTORS:

 

  • The independent directors of the company shall hold at least one meeting in a year, without the attendance of non-independent directors and members of management;
  • All the independent directors of the company shall strive to be present at such meeting;
  • The meeting shall:
    - review the performance of non-independent directors and the Board as a whole;
    - review the performance of the Chairperson of the company, taking into account the views of executive directors
      and non-executive directors;
    - assess the quality, quantity and timeliness of flow of information between the company  management  and  the 
      Board  that  is  necessary  for  the  Board  to effectively and reasonably perform their duties.

EVALUATION MECHANISM OF INDEPENDENT DIRECTORS:

 

  • The performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.
  • On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent director.

 

THIS CODE OF CONDUCT FOR BOARD OF DIRECTORS (INCLUDING INDEPENDENT DIRECTORS) AND SENIOR MANAGEMENT IS ADOPTED BY THE BOARD OF DIRECTORS OF THE COMPANY TO REGULATE APPOINTMENT, DUTIES AND ACTS OF THE BOARD OF DIRECTORS (INCLUDING INDEPENDENT DIRECTORS) AND SENIOR MANAGEMENT OF THE COMPANY.

 

BESIDES, THE CODE OF CONDUCT, ALL BUSINESS POLICIES OF THE COMPANY SHALL APPLY TO BOARD OF DIRECTORS (INCLUDING INDEPENDENT DIRECTORS) AND SENIOR MANAGEMENT.

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