A. Policy for appointment and removal of Director, Key Managerial Personnel and Senior Management

(Appointment criteria and qualifications)

I. Qualifications for appointment of Directors (including Independent Directors)

The incumbent Directors shall be persons of eminence, integrity, standing and knowledge with significant achievements and experience in business, professions and / or public service, deep expertise and insights in sectors/areas relevant to the Company, ability to contribute to the Company‘s growth, complementary skills in relation to the other Board members. Broadly, the following points need to be considered by the Committee

  • Their financial or business literacy, skills, etc.
  • Their industry experience.
  • Other appropriate qualification/experience to meet the objectives of the Company.

In line with the applicable provisions of Companies Act, 2013, and Rules made under it, as amended from time to time, the Nomination and Remuneration Committee shall have the discretion to evaluate, consider and fix any other criteria or norms, from time to time, for selection of the most suitable candidate/s.

Appointment of Independent Directors is also subject to compliance of provisions of Section 149 of the Companies Act, 2013, read with Schedule IV and the rules under them.

The appointment/continuity to hold the appointment of Directors is also subject to compliance of ‗Fit and Proper Policy‘ of the Company.

II. Qualifications for appointment of KMP andSenior Management

  • To have the qualifications, experience, skills and expertise to effectively discharge their duties and responsibilities.
  • To practiseand encourage professionalism and a transparent working environment.
  • To build teams and carry the team members along for achieving the goals/objectives and corporate mission.
  • To adhere strictly to the Company‘s Code of Conduct in force and as amended from time to time.
  • Any other responsibility that may be given in the course of their association with the Company.

III. Term/Tenure of Directors (including Independent Directors) and KMP

a. Managing Director/Whole-Time Director

The Company shall appoint or re-appoint any person as its Managerial Personnel for a term not exceeding five years at a time. No re-appointment shall be made earlier than one year before the expiry of the term.

b. Independent Director

An Independent Director shall hold office for a term up to five consecutive years on the Board of the Company and will be eligible for reappointment on the passing of a special resolution by the Company 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.

Provided that 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.

The maximum tenure of Independent Directors shall also be in accordance with the Companies Act, 2013, and clarifications/circulars issued by the Ministry of Corporate Affairs in this regard, from time to time.

c. KMP

A whole-time KMP of the Company shall not hold office in more than one company except in its subsidiary company at the same time. However, a whole-time KMP can be appointed as a Director in any company with the permission of the Board of Directors of the Company.

IV. Removal of Directors (including Independent Directors) and KMP

Due to reasons for any disqualification mentioned in the Companies Act, 2013, rules made under it or under any other applicable Act, rules and regulations, the committee may recommend, to the Board with reasons recorded in writing, removal of a Director or KMP subject to the provisions and compliance of the said Act, rules and regulations.

V. Retirement of Directors (including Independent Directors) KMP and Senior Management

Any Director other than the Independent Director, KMP and Senior Management shall retire in line with the applicable provisions of the Companies Act, 2013, and the prevailing policy of the Company.

The Company will have the discretion to retain the Director, KMP, Senior Management in the same position/remuneration or otherwise even after attaining the retirement age, for the benefit of the Company, subject to due compliance of Companies Act, 2013 and any other applicable law

VI. Positive attributes of Directors (including Independent Directors)

The following are some of the positive attributes of Directors (including Independent Directors) to be considered by the Committee

  • Directors are to demonstrate integrity, credibility, trustworthiness, ability to handle conflict constructively, and the willingness to address issues proactively.
  • Actively update their knowledge and skills with the latest developments in the industry, market conditions and applicable legal provisions.
  • Willingness to devote sufficient time and attention to the Company‘s business and discharge their responsibilities.
  • To assist in bringing independent judgement to bear on the Board‘s deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct.
  • Ability to develop a good working relationship with other Board members and contribute to the Board’s working relationship with the senior management of the Company.
  • To act within their authority, assist in protecting the legitimate interests of the Company, its shareholders and employees.
  • Independent Directors to meet the requirements of the Companies Act, 2013, read with the rules made under it as amended from time to time.

B. Policy relating to remuneration of Directors, Key Managerial Personnel and Senior Management

  1. To ensure that the level and components of remuneration is reasonable and sufficient to attract, retain and motivate Directors, KMP and other employees of the quality required to run the Company successfully.
  2. To ensure that no director/KMP/other employee is involved in deciding his or her remuneration.
  3. The trend prevalent in the similar industry, and nature and size of the business is kept in view and given due weightage to arrive at a competitive remuneration.
  4. To ensure that the relationship of remuneration to the performance is clear and meets appropriate performance benchmarks which are unambiguously laid down and communicated.
  5. Improved performance should be rewarded by an increase in remuneration and suitable authority for value-addition in the future.
  6. Remuneration packages should strike a balance between fixed and incentive pay, where applicable, reflecting short- and long-term performance objectives appropriate to the Company’s working and goals.
  7. The Remuneration/Compensation/Profit-Linked Incentive etc. to Managerial Personnel and KMP be determined by the Committee and recommended to the Board for approval. The Remuneration/Compensation/Profit-Linked Incentive etc. to be paid for Managerial Personnel shall be subject to the prior/post approval of the shareholders of the Company, wherever required.
  8. The remuneration and commission to be paid to Managerial Personnel shall be in line with the statutory provisions of the Companies Act, 2013, and the rules made under it in force.
  9. Managerial Personnel and KMP shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee under the statutory provisions of the Companies Act, 2013, and the rules made under itthat are in force. The break-up of the pay-scale and amountof perquisites including employer‘s contribution to provident fund, pension scheme, medical expenses etc., shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders, wherever required.
  10. If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managerial Personnel 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 prior approval of the Uniongovernment.
  11. If any Managerial Personnel draws or receives, directly or indirectly by way of remuneration any such sums over the limits prescribed under the Companies Act, 2013 he/ she shall refund such sums to the Company and, until such sum is refunded, hold it in trust for the Company.
  12. Increments, if declared to the existing remuneration/ compensation structure, shall be recommended by the Committee to the Board andshould be within the limits approved by the Shareholders in the case of Managerial Personnel.
  13. Increments, if declared, will be effective from April 1 of each financial year in respect of Managerial Personnel, KMP, Senior Management subject to other necessary approvals from statutory authorities as may be required.
  14. Where any insurance is taken by the Company on behalf of its Managerial Personnel, KMP and Senior Management 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.

Remuneration to Non-Executive/ Independent Directors

  1. Remuneration/ Profit-Linked Commission
    The remuneration/ profit-linked commission shall be in accordance with the statutory provisions of the Companies Act, 2013, and the rules made under it for the time being in force.
  2. Sitting Fees
    The Non- Executive/ Independent Director 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 the maximum amount as provided in the Companies Act, 2013, for eachmeeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.

This policy was last reviewed by the Board in its meeting on May 10, 2019.

Terms And Conditions of Appointment of Independent Directors

The terms and conditions of appointment of Independent Directors of Village Financial Services Limited (“VFS” or “the Company”) are subject to the applicable provisions of the Companies Act, 2013. (“the Act”) as amended from time to time, the Articles of Association of the Company.

The following are the details of Independent Directors of the Company.

Sr. No.Name of Independent DirectorDirector Identification NumberTenure
   FromTo
1.    
2.    

1. Appointment

The Company has adopted the requirements under the provisions of the Companies Act, 2013, including rules made under it, as modified, amended or substituted from time to time and as may be applicable to the appointment and tenure of Independent Directors.

An Independent Director shall not be liable to retire by rotation in terms of the provisions of Companies Act, 2013.

An Independent Director will serve for not more than two terms of five years each on the Board of the Company subject to the maximum tenure of ten years as prescribed under the Companies Act, 2013.

Appointment for the second term as an Independent Director shall be based on the recommendation of the Nominations & Remuneration Committee of the Board and subject to the approval of the Board of Directors (the ‗Board‘) and of the Shareholders by way of a special resolution. The reappointment would be considered by the Board based on evaluation of the performance and further subject to satisfying the requisite criteria of Independence as specified in the Companies Act, 2013.

The appointment is also subject to the maximum permissible Directorships that one can hold in line with the provisions of the Companies Act, 2013.

The term Independent Director should be construed as defined under the Companies Act, 2013.

2. Committees

The Board may invite any of the Independent Directors for being appointed on one or more existing Board Committees or any such Committee that will be set up in the future. The appointment on such Committee(s) will be subject to the applicable provisions of the laws/regulations. The Board may reconstitute the composition of any/all the Committees, from time to time, and any such change shall be promptly communicated to the Independent Director concerned.

3. Role, Duties and Responsibilities

The role, functions and duties of the Independent Directors shall be in accordance with those as prescribed under the Companies Act, 2013, the provisions of Schedule IV (Code for Independent Directors) to the Act, as modified, amended or substituted from time to time and as may be applicable and Articles of association of the Company.

As members of the Board, the Independent Directors along with other Directors will be collectively responsible for meeting the objectives of the Board, viz.,

  • Fulfilling requirements under the Companies Act, 2013 (the Act) and Rules framed under it;
  • Taking accountability under Directors‘ Responsibility Statement which forms part of the Board‘s Report to the shareholders;
  • Reviewingthe Company’s business strategy, financial plan and monitoring the performance of the Company;
  • Safeguarding the interest of all stakeholders; and
  • Advisingand counseling the management in the respective area of expertise.

There are certain duties prescribed for all Directors, both Executive and Non-Executive, which are fiduciary in nature and are broadly as under

  • Director shall act in good faith to promote the objectives of the Company for the benefit of its members as a whole and in the best interest of the Company and all its stakeholders;
  • Directors shall discharge their duties with due and reasonable care, skill and diligence;
  • Directors shall not involve themselves in a situation in which they may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the Company;
  • Director shall not achieve or attempt to achieve any undue gain or advantage either to themselves or to their relatives, partners or associates;
  • Director shall not unfairly obstruct the functioning of the Board or any Committee of the Board;
  • Director shall act within their authority and assist in protecting the legitimate interest of the Company, its shareholders, its employees and all other stakeholders;
  • Director shall abide by the ‗Code for Independent Directors‘ as outlined in Schedule IV to the Companies Act, 2013;
  • Director shall not disclose any confidential/privileged information of the Company unless such disclosure is expressly approved by the Board or required by law.

4. Time Commitment

Considering the nature of the role of Independent Directors, it is difficult for the Company to lay down specific parameters on time commitment.

The Independent Directors agree to devote such time as is prudent and necessary for the proper performance of their role, duties and responsibilities as Independent Director.

5. Remuneration

The Independent Directors will be paid such remuneration by way of sitting fees for meetings of the Board and its Committees as may be decided by the Board from time to time under the limits prescribed under the Companies Act, 2013 and rules made under it.

Further, the Independent Directors will not be granted any options under any employee stock options schemes of the Company.

In addition to the sitting fees, the Independent Directors may also be paid a Commission, as may be determined by the Board, as recommended by the Nomination and Remuneration Committee after considering the performance of the Company and the performance and contribution of the Independent Directors, as evaluated by the Board.

6. Reimbursement of Expenses

The Company may reimburse the Independent Directors such expenditure as may be incurred by them while performing their role as an Independent Director of the Company, including expenditure incurred by them for travel, accommodation or any out-of-pocket expenses for attending Board/Committee Meetings, General Meetings, Court-convened Meeting, meetings with Shareholders /Creditors /Management.

7. Code of Conduct

As Independent Directors of the Company, they agree to comply with the VFS Code of Conduct, as and when adopted by the Board.

Unless specifically authorized by the Company, the Independent Directors shall keep confidential all information concerning the Company and shall not divulge or disclose the same to any person during the term of their appointment. Their obligation of confidentiality shall survive cessation of their directorships with the Company.

The Independent Directors are not to engage in any activity which might impede the application of their independent judgment in the best interest of the Company.

8. Performance Evaluation

The performance of all the Directors and the entire Board shall be evaluated annually.

Evaluation of Independent Directors shall be done by the Board and criteria for evaluation shall be determined by the Nomination & Remuneration Committee of the Board.

The appointment/re-appointment/continuation of Independent Directors on the Board shall be subject to the outcome of the annualevaluation process.

9. Disclosures, Conflict of Interest

It is accepted and acknowledged that the Independent Directors may have business interests other than those of the Company. They are required to declare any such directorships, appointments and interest to the Board in writing in the prescribed form.

During their term, the Independent Directors agree to promptly provide declaration under Section 149(7) of the Act, upon any change in circumstances which may affect their status, individually, as Independent Director. Further , they also agree to confirm individually their compliance with the criteria of independence every financial year.

10. Disengagement

The Independent Directors may resign from the directorship of the Company by giving a notice in writing to the Company stating the reasons for resignation. The resignation shall take effect from the date on which the notice is received by the Company or the date, if any, specified by them in the notice, whichever is later.

The directorship of Independent Directors on the Board shall cease in accordance with the provisions of the Companies Act, 2013, or other applicable laws.

The Company may disengage the Independent Directors prior to completion of their terms (subject to compliance of relevant provisions of the Act) upon

  • for reasons as enumerated in the letter of appointment issued to them;
  • the Independent Directors failing to meet the criteria for independence as envisaged in Section 149(6) of the Act, as amended from time to time.

Continuation of an Independent Director‘s appointment is contingent on his/her getting re-elected by the shareholders‘ in accordance with provisions of Companies Act, 2013 and the Articles of Association of the Company, from time to time in force.

The Independent Director will not be entitled to compensation if the shareholders do not re-elect him/her at any time.

11. Changes in personal details

During the tenure of appointment, the Independent Director shall promptly inform the Companyor the Registrar of Companies in the prescribed manner of any change in address or contact details or personal details provided to the Company at the time of appointment.

12. General

Action, in particular, that should not be taken by the Independent Directors while in Office, include the following

  1. Action that involves any violation of applicable law;
  2. Action that involves any breach of the Company‘s Code of Conduct, as and when framed;
  3. Action that either involves their personal interest, except as disclosed in terms of the applicable laws, or compromises or conflicts with the interest of the Company.

Note: These are the general terms and conditions of appointment of Independent Directors which are subject to modification / amendment.

Last Reviewed by the Board in its meeting held on 20.07.2018