[Pursuant to Regulation 16(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]
1. Purpose and Scope :
The Policy for determining ‘material’ subsidiary companies has been framed in accordance with the provisions of Regulation 16(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”).
The Policy will be used to determine the Material Subsidiaries of the Company and to provide the governance framework for such subsidiaries.
All the words and expressions used in this Policy, unless defined hereafter, shall have meaning respectively assigned to them under the Listing Regulations and in the absence of its definition or explanation therein, as per the Companies Act, 2013 and the Rules, Notifications and Circulars made/issued thereunder, as amended, from time to time.
2. Identification of ‘Material’ Subsidiary :
Except as otherwise provided, a subsidiary shall be considered as material if –
i. the investment of the Company in the subsidiary exceeds 10 per cent of its consolidated net worth as per the audited balance sheet of the immediately preceding financial year or such other limit as may be prescribed from time to time or,
ii. the subsidiary has generated 10 per cent of the consolidated income of the Company during the immediately preceding financial year or such other limit as may be prescribed from time to time.
Material non-listed Indian subsidiary shall mean an unlisted subsidiary, incorporated in India, whose income or net worth (i.e. paid-up capital and free reserves) exceeds10 per cent of the consolidated income or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding financial year.
3. Governance Framework :
i. The Audit Committee of Board of the Company shall review the financial statements, in particular, the investments made by the unlisted subsidiary company.
ii. The minutes of the Board Meetings of the unlisted subsidiary companies shall be placed before the Board of the Company.
iii. The management shall periodically bring to the attention of the Board of Directors of the Company, a statement of all significant transactions and arrangements entered into by the unlisted subsidiary company.
A transaction or arrangement shall be considered significant if any individual transaction or arrangement that exceeds or is likely to exceed 10 percent of total revenues or total expenses or total assets or total liabilities, as the case may be, of the unlisted subsidiary for the immediately preceding financial year.
iv. One Independent Director of the Company shall be a director on the Board of the Material unlisted subsidiary company, incorporated in India or not.
For the purposes of this provision, notwithstanding anything to the contrary contained in Clause 2 above, the term “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds 20 percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding financial year.
4. Disposal of Material Subsidiary:
i. The Company shall obtain prior approval of shareholders by way of special resolution, if the disposal of shares (either on its own or together with other subsidiaries) results in reduction of its shareholding, to less than 50 percent or cease the exercise of control over the subsidiary;
The following shall not be considered where disinvestment is:
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- under a scheme of arrangement duly approved by a Court/Tribunal, or
- under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved.
ii. The Company shall obtain prior approval of shareholders by way of special resolution, if any sale, disposal, lease of assets amount to more than 20 percent of the assets of the material subsidiary on an aggregate basis during a financial year;
The following shall not be considered while determining the aforesaid threshold of 20 percent, if such sale, disposal, lease of assets is:
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- under a scheme of arrangement duly approved by a Court/Tribunal, or
- under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved.
5. Secretarial Audit :
Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice, in such form as may be specified with effect from the year ended March 31, 2019.
6. Policy Review :
This Policy shall be subject to review as may be deemed necessary and in accordance with any regulatory amendments.
7. Website
This Policy shall be disclosed on the website of the Company.
