REPORT ON CORPORATE GOVERNANCE
A report on Corporate Governance is set out in compliance with the Corporate Governance requiredments as stipulated in Clause 49 of the Listing Agreement with the Bombay Stock Exchange.
Company's philosophy on corporate governance
Corporate governance is about commitment to values and ethical business conduct. Arihant Capital Markets Ltd. (hereinafter referred to as 'the Company' or 'Arihant') believes that good corporate governance consists of a combination of business practices which result in enhancement of the value of the Company to its shareholders and simultaneously enables the Company to fulfill its obligations to other stakeholders such as customers, employees and financiers, and to the society in general.
Transparency, integrity, fairness, accountability and disclosure are Arihant's business ethos that are central to the working of the Company and its directors. We are happy to inform you that our company's existing practices and policies are significantly in conformity with the requirements stipulated by SEBI and complies with the requirement of the corporate governance in terms of Clause 49 of the listing agreement.
Board of Directors
a) Size and composition of the Board
The Company has the policy to have an appropriate mix of executive and independent directors to maintain the independence of the Board. Currently the Board consists of 7 Directors out of which two are executive directors, four are independent directors and one is Non Executive director. The Chairman of the Board is an executive director. The Board believes that the current size is appropriate, based on our present circumstances. The composition of the board is in conformity with the code of corporate governance as specified under clause 49 of the Listing Agreement.
• Other than Mr. Ashok Kumar Jain and Mr. Sunil Kumar Jain who are related as brothers, none of the directors are related to one another.
• Other directorships do not include alternate directorships, directorships of private limited companies, of companies registered under section 8 of the Companies Act, 2013 and of companies incorporated outside India.
• Chairmanship/Membership of board committees includes chairmanship/membership of audit committee and stakeholders' relationship committee only. The membership/chairmanship of board committee of private limited companies, foreign companies and companies registered under section 8 of the Companies Act, 2013 are excluded for the aforesaid purpose.
The Company provides the information as set out in Clause 49 of the Listing Agreement to the Board and the Board committees to the extent it is applicable and relevant, such information is submitted either as part of the agenda papers in advance of the respective meetings or by way of presentations and discussions during the meeting.
The important decisions taken at the Board or committee meetings are communicated to the concerned departments. The Board periodically reviews compliance reports of all laws applicable to the Company. Steps are taken by the Company to rectify instances of non-compliance, if any.
Committees of the Board
Your Company has three major Board level committees. These committees play on important role in overall management. The Board committees meet at regular intervals and minutes of the committee meetings are placed before the board meeting.
i) Audit Committee
ii) Stakeholders Relationship Committee
iii) Remuneration and Nomination Committee
Audit Committee of the board of directors is entrusted with the responsibility to supervise the Company's internal controls and financial reporting process. The Audit Committee of Arihant consists of three members, viz., Mr. Akhilesh Rathi, Mr. Sunil Kumar Jain and Mr. Rakesh Jain. The chairman of the committee is Mr. Akhilesh Rathi and Mr. Mahesh Pancholi acts as the secretary to the committee. The Committee's composition meets with requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. All the members of the committee have requisite financial management expertise.
The audit committee met four times during the financial year 2014-15, the table below provides the attendance of the audit committee members:
Stakeholders Relationship Committee
The shareholders'/investors' grievance committee comprising of four members, viz. Mr. Akhilesh Rathi, Mr. Ashok Kumar Jain, Mr. Sunil Kumar Jain and Mr. Rakesh Jain, looks into redressal of shareholder/investor complaints like non-transfer of shares, non-receipt of balance-sheet, non-receipt of dividend etc. Mr. Akhilesh Rathi is the chairman of the committee while Mr. Mahesh Pancholi, the compliance officer of the Company, acts as the secretary to the committee. This committee oversees the performance of the registrar and transfer agents and secretary who have been authorised to deal with all these matters and also recommends measures for overall improvement of the quality of investor services.
During the financial year 2014-2015, the committee held four meetings. During the meeting all queries like non-receipt of annual reports, dividend, transfer of shares, new share certificates, change of address etc., were resolved to the satisfaction of the shareholders. Stakeholders are requested to furnish their telephone number and e-mail addresses to facilitate prompt action. There were no complaints outstanding as on March 31, 2015. The Committee's Composition meets with the requirements of Section 178(5) of the Companies Act, 2013 and as per the requirements of SEBI.
Remuneration and Nomination committee
The remuneration and nomination committee determines and recommends to the Board the compensation payable to the directors. The remuneration committee consists of three non-executive directors as members, viz., Mr. Akhilesh Rathi, Mr. Sunil Kumar Jain and Mr. Rakesh Jain. Mr. Mahesh Pancholi acts as the secretary and Mr. Akhilesh Rathi is the chairman of the committee. One meeting of the committee was held during the financial year 2014 -2015.
The terms of reference of remuneration committee include deciding Company's policies on specific remuneration packages for all the directors, designing and implementation of performance appraisal systems and discretionary performance bonus payments for them and such other functions as may be delegated to it by the Board of Directors.
While deciding on the remuneration to the Directors, the Board and remuneration committee considers the performance of the company, the current trends in the industry, the qualifications of the appointee, his/her experience, level of responsibility, past performance and other relevant factors.
i. The Company does not have any material related parties' transactions which have potential conflict with the interest of the Company at large. Transactions with related parties are disclosed in Note No. 23 of the annual accounts of the Company forming part of the annual report.
ii. The financial statements have been prepared in accordance with the accounting policies generally accepted in India.
iii. There were no instances of non-compliance on any matter related to the capital markets, resulting in disciplinary action against the Company, during the last three years.
iv. The Company has implemented the mandatory requirements of corporate governance as set out in the listing agreement with the stock exchanges. In respect of compliance with the non-mandatory requirements, the Company has constituted a Nomination and Remuneration Committee, details whereof are given under the heading of Nomination and Remuneration Committee. The quarterly, half-yearly and annual results of the Company are put up on the Company's website www.arihantcapital.com and are being published in national newspapers in English and Hindi language. The auditors' observations / suggestions / qualifications, if any, have been adequately explained wherever necessary in the appropriate notes to accounts and are self explanatory.
v. The Company has constituted a risk management committee comprising of business heads and other functional heads of the company. The Company has adopted a risk management policy framework for risk identification, assessment and control to effectively manage risks associated with the business of the Company.
vi. The Company has adopted Whistle Blower Policy with an objective to promote ethical behavior in all its business activities and has put in place a mechanism of reporting illegal or unethical behavior, wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to their immediate supervisor or such other person as may be notified by the management to the workgroups. The Confidentiality of those reporting violations is maintained and they are subjected to any discriminatory practice.
Code for prevention of insider-trading practices
The Company has instituted a comprehensive code for prevention of insider trading, for its directors and designated employees, in compliance with SEBI (Prohibition of insider Trading) Regulations, 1992, as amended from time to time.
No special resolution was passed through postal ballot during the Financial Year 2014-15. None of the business proposed to be transacted in the ensuing Annual General Meeting require passing a special resolution through postal ballot. All the resolutions including special resolutions set out in respective notices were passed by shareholders by show of hands.
Certificate from the practicing company secretary confirming the compliance with all the conditions of corporate governance as stipulated in Clause 49 of the listing agreement is enclosed along with this report.
CEO / CFO certification
As required under Clause 49 V of the Listing Agreement with the BSE, the CEO/CFO certificate for the financial year 2014-15 signed by Mr. Ashok Kumar Jain, Managing Director & CEO and Mr. Tarun Goyal, CFO was placed before the Board of Directors at their meeting held on 29th May, 2015.
The company does not have any material subsidiary as defined under Clause 49 of the Listing Agreement. The Audit Committee reviews the consolidated financial statements of the Company and the investment made by its unlisted subsidiary companies. The minutes of the board meetings along with a report on significant developments of the unlisted subsidiary companies are periodically placed before the Board of Directors of the Company.
Code of conduct for directors and senior management
In compliance with Clause 49 of the Listing Agreement, the Company has adopted a Code of Conduct and Ethics. The code is applicable to all board members and senior management personnel one level below the executive directors including all functional heads. The code of conduct is available on the website of the Company www.arihantcapital.com
Requisite annual affirmations of compliance with respective codes have been made by the directors and senior management of the Company. A declaration signed by the Chairman & Managing Director to this effect is enclosed at the end of this report.
Communication to the shareholders
The quarterly/ half yearly / annual results and official news releases of the Company are published in accordance with the Stock Exchange Listing Agreement in newspapers viz. "Free Press" (English), "Choutha Sansar" (Hindi). In addition to this the annual report is also sent to all the shareholders. Quarterly and annual financial statements, along with shareholding pattern are also posted on our website www.arihantcapital.com under the caption "Investor Relations" in the Section -'About us'.
As a responsible corporate citizen, the Company welcomes and supports the 'Green Initiative' taken by the Ministry of Corporate Affairs, Government of India (MCA), by its recent circulars, enabling electronic delivery of documents including the annual report, quarterly, half yearly results to shareholders at their e-mail address previously registered with the depository participants (DPs) / company / registrars and share transfer agents.
Shareholders who have not registered their e-mail addresses so far are requested to register their e-mail addresses to help us in the endeavour to save trees and protect the planet. Those holding shares in demat form can register their e-mail address with their concerned DP. Those shareholders who hold shares in physical form are requested to register their e-mail addresses with our registrar, Ankit Consultancy Pvt. Ltd, by sending a letter, duly signed by the first/sole holder quoting details of folio no.
Management discussion and analysis report
Management Discussion and Analysis Report forms a part of the Annual Report.
Declaration by the CEO under Clause 49 of the Listing Agreement regarding adherence to the Arihant code of conduct
In accordance with Clause 49 I (D) of the Listing Agreement, I hereby declare that all the directors and senior management personnel of the Company have affirmed compliance with the code of conduct applicable to all the directors and senior management, for the year ended March 31st, 2015.
For Arihant Capital Markets Ltd
Ashok Kumar Jain
Chairman and Managing Director
Dated: 29th May, 2015