REPORT ON CORPORATE GOVERNANCE
1. COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
The Company's philosophy on Corporate Governance envisages adopting the high standards of transparency, accountability and ethics in all transactions and interactions with all stakeholders including but not limited to the shareholders, the Government, Suppliers, Contractors and other business associates. Focus of the Company has always been to ensure continuing value creation for each of its stakeholders and to achieve business excellence with the goal of long term sustainable development.
2. SIZE AND COMPOSITION OF THE BOARD
The Board of Directors of your Company comprises of Four (4) directors out of whom three (3) are non-executive and two (2) directors are Non-Executive Independent directors as on 31st March, 2015. Mrs. Meenakshi Gopal has been appointed as an Additional Director (Independent Non-Executive) w.e.f. 31.03.2015 by the Board of Directors, whose appointment as an Independent Non-Executive Director is recommended to the shareholders at the ensuing Annual General Meeting. The non-executive directors are proficient in their own fields and bring with them decades of rich experience. Mr. Lalit Bhasin is the Chairman and Non - Executive Director of the Company. Mr. Anil Goyal is the Managing Director of your Company. He has to his credit nearly 32 years of corporate experience. He is responsible for overall management of the Company. The composition of the Board is in conformity with the Clause 49 of the Listing Agreement.
As requirement under Section 149(3) of the Companies Act, 2013, Mrs. Meenakshi Gopal, has been appointed as an Independent Woman Director of the Company.
None of the Directors is a Member of more than 10 Committees and more than 5 Committees as specified in Clause 49 of the Listing Agreement.
Four (4) Board meetings were held during the year under review on 17th May, 2014, 06th August, 2014, 14th November, 2014 and 11th February, 2015.
The particulars regarding composition of the Board of Directors and its Meetings held during the year are given hereunder
3. BOARD COMMITTEES AND REMUNERATION TO DIRECTORS
(A) AUDIT COMMITTEE
The Audit Committee as reconstituted w.e.f. 31st March, 2015 comprises of Mr. L. N. Malik as its Chairman, Mr. Lalit Bhasin and Mrs. Meenakshi Gopal as its Members and the Company Secretary of the Company as Secretary to the Committee. As per the provisions of Sec 177(4) of the Companies Act, 2013 and Rules made there under and as per revised Clause 49 of the Listing Agreement applicable from 01st October, 2014, the scope of the Audit Committee has been enlarged and accordingly the terms of reference was revised by the Board in its meeting held on 17th May, 2014. The Audit Committee has been empowered, inter-alia, to carry out the following functions:
1. Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company;
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
4. Reviewing, with the management, the annual financial statements and auditor's report thereon before submission to the board for approval, with particular reference to:
a) Matters required to be included in the Director's Responsibility Statement to be included in the Board's report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013.
b) Changes, if any, in accounting policies and practices and reasons for the same.
c) Major accounting entries involving estimates based on the exercise of judgment by management.
d) Significant adjustments made in the financial statements arising out of audit findings.
e) Compliance with listing and other legal requirements relating to financial statements.
f) Disclosure of any related party transactions.
g) Qualifications in the draft audit report.
5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval;
6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;
7. Review and monitor the auditor's independence and performance, and effectiveness of audit process;
8. Approval or any subsequent modification of transactions of the company with related parties;
9. Scrutiny of inter-corporate loans and investments;
10. Valuation of undertakings or assets of the company, wherever it is necessary;
11. Evaluation of internal financial controls and risk management systems;
12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;
14. Discussion with internal auditors of any significant findings and follow up there on;
15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board;
16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
18. To review the functioning of the Whistle Blower mechanism;
19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;
20. The Audit Committee shall mandatorily review the following information:
a) Management discussion and analysis of financial condition and results of operations;
Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;
Management letters / letters of internal control weaknesses issued by the statutory auditors;
Internal audit reports relating to internal control weaknesses; and The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee. The Audit Committee shall also have powers, which should include the following:
a) To investigate any activity within its terms of reference.
b) To seek information from any employee.
c) To obtain outside legal or other professional advice.
d) To secure attendance of outsiders with relevant expertise, if it considers necessary.
e) To consider and act on any matters as or included under Clause 49 of the Listing Agreement and/or as may be so included from time to time, whether provided here in above or not.
f) To deal with any other matters related and or incidental to the above or as may be assigned, in addition to the aforesaid, by the Board from time to time.
During the year under review, four(4) Audit Committee Meetings were held on 17th May, 2014, 06th August, 2014, 14h November, 2014 and 11th February, 2015. All the members were present in all the Committee Meetings. The Audit Committee plays a crucial role in running the Corporate Governance Functions. During the year, the roles and responsibility of the Audit Committee have been effectively carried out. The Audit Committee reviewed the related party transactions, financial operations and performance of the Company, interacted with the Auditors and Internal Auditors, considered the reports of the Auditors and provided its valuable suggestions and recommendations to the Board of Directors from time to time.
(B) STAKEHOLDERS RELATIONSHIP COMMITTEE
The Board of Directors in its meeting held on 17th May, 2014 changed the nomenclature of the Shareholders Investor Grievance Committee to Stakeholders Relationship Committee. The said Committee shall be empowered, inter-alia, to carry out the following functions:
1. To consider and approve the transfer, transmission and issue of fresh/ duplicate share certificates.
2. To review the status of dematerialization of Company's shares and matters incidental thereto.
3. To review and monitor the approval to the transfers and transmissions made by the Executive Director, under executive authority delegated to him from time to time.
4. To consider, review and look into the redressal of grievances of shareholders, debenture holders and other security holders.
5. To consider and resolve the grievances of the security holders of the Company including complaints related to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends.
6. To consider and finalize the Report on Corporate Governance to be annexed with the Annual Report of the company.
7. To deal with any other matters related and/ or incidental to the shareholders. The Committee was reconstituted by the Board of Directors in their meeting held on 31st March, 2015 comprising of Mr. Lalit Bhasin as its Chairman, Mr. Anil Goyal and Mrs. Meenakshi Gopal, as its members and Company Secretary of the Company as Secretary to the Committee.
During the year under review Three (3) Stakeholders Relationship Committee Meetings were held on 17th May, 2014, 10th September, 2014, and 11th February, 2015 and the same were attended by all the committee members. Mr. Anil Goyal, Managing Director has, however, been empowered to approve transfers up to 2000 Equity Shares under one folio at a time.
(C) NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors in their meeting held on 17th May, 2014 constituted a "Nomination and Remuneration Committee" in terms of the provisions of Section 178 of the Companies Act, 2013 and Listing Agreement. The said Committee shall be empowered, inter-alia, to carry out the following functions:
1. Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees;
2. Formulation of criteria for evaluation of Independent Directors and the Board;
3. Devising a policy on Board diversity;
4. Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal.
5. To deal with any other matters related and/ or incidental to the above or as may be assigned, in addition to the aforesaid by the Board from time to time.
The Committee was reconstituted by the Board of Directors w.e.f. 31st March, 2015 comprises of Mr. L.N. Malik, as its Chairman, Mr. Lalit Bhasin and Mrs. Meenakshi Gopal as the members of the Committee and Company Secretary of the Company as the Secretary to the Committee.
During the year under review, Two (2) Nomination and Remuneration Committee Meetings were held on 11th February, 2015 and 30th March, 2015 and the same were attended by all the committee members.
4. NOMINATION AND REMUNERATION POLICY
Pursuant to the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors of the Company, based on the recommendation of Nomination and Remuneration Committee, has formulated a Remuneration policy for Directors and Senior Management. The objective and broad framework of Remuneration policy is to consider the level and composition of remuneration based on the performance benchmark and potential of the Directors. The Remuneration Policy is annexed to this Report.
5. PERFORMANCE EVALUATION CRITERIA
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, individual Directors, Audit and Nomination & Remuneration Committees. A structured questionnaire covering their areas of functioning, execution and performance of specific duties, obligations and governance was prepared. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. Performance evaluation of individual Directors on parameters such as level of independence of judgment, safeguarding the interest of the Company and its shareholders etc. was done by the Board separately. The Board also carried out annual performance evaluation of the working of its Audit, Nomination and Remuneration as well as Stakeholders Relationship Committee. The Directors expressed their satisfaction with the evaluation process.
6. MEETING OF INDEPENDENT DIRECTORS
In pursuance to Clause 49(II)(B)(6) of the Listing Agreement, the Independent Directors met on 11th February, 2015, without the presence of Non-Independent Directors and members of the management, inter-alia, to discuss:
6.1 Evaluation and take note of the new provisions with regard to Independent Directors under the Companies Act, 2013.
6.2 To familiarize the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmes.
6.3 Evaluation of the performance of Non-Independent Directors and the Board as a whole and the flow of Information between the management and the Board to perform its duties effectively.
Mr. Arvind Kohli and Mr. L. N. Malik, Independent Directors of the Company were present at the meeting.
7. INTERNAL COMPLAINT COMMITTEE
The Board of Directors constituted the Internal Compliant Committee and approved a policy on Sexual Harassment in their meeting held on 06th August, 2014 as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made there under. The objective of this Committee is to create healthy work environment for women and prevention of sexual harassment at workplace. No Complaints were received by the Internal Complaint Committee from any Woman Employee with respect to Sexual Harassment. A declaration to this effect has been submitted to the Board by the Internal Complaint Committee.
A Special Awareness Programme for the awareness of Sexual Harassment was organised by the Internal Complaints Committee to curb sexual harassment at the workplace. The primary purpose of this programme was to create awareness amongst woman employees about their rights in the case of sexual harassment. "Awareness programme on Sexual Harassment of women at workplace" was conducted by Mrs. Banmala Jha, Presiding Officer of the Internal Complaint Committee, addressing Sexual Harassment of women at workplace guidelines and norms prescribed by the Honorable Supreme Court of India for dealing with cases of Sexual Harassment of women at workplace. The woman employees of the Company communicated their satisfaction from the programme.
8. POLICY ON RELATED PARTY TRANSACTIONS
In compliance of Clause 49(VII) of the Listing Agreement, the Board of Directors has approved a policy on dealing with related party transactions in its meeting held on 14th November, 2014. The policy on Related Party Transactions as approved by the Board has been uploaded on the Company's website viz. www.hbieasing.com having following web link, www.hbieasing.com/investor information/Corporate Governance
9. FAMILIARIZATION PROGRAMME OF INDEPENDENT DIRECTORS
As per Clause 49 of the Listing Agreement the Company has imparted a familiarization programme to familiarize the Independent Directors with the Company, their roles, rights and responsibilities. The details of such familiarization programme has already been uploaded on the Company's website viz. www.hbleasing.com having following web link, www.hbleasing.com/Investor Information/Corporate Governance
10. DIRECTOR'S REMUNERATION
Executive) on the Board of the Company w.e.f. 31st March, 2015.
# Mr. Arvind Kohli, Independent Non - Executive Director has resigned from the Board of the Company on 31st March, 2015.
# Dr. M.P. Jain Independent Non - Executive Director has resigned from the Board of the Company on 5th November, 2014.
The non-executive directors are paid sitting fees for attending each meeting of the Board of Directors and the Committees constituted by the Board. The sitting fee for each meeting of Board of Directors and the Committee of Directors is fixed by the Board of Directors within the overall ceiling laid down under the Companies Act. None of the Directors of your Company are paid remuneration apart from sitting fees.
I. There have been no materially significant related party transactions, pecuniary transactions or relationships other than those disclosed in the financial statements for the year ended 31st March 2015 (Refer Note No. 21 to the notes to accounts) forming part of Balance Sheet and Profit & Loss Account). Accordingly, the same have not been reproduced here. The said related party transactions do not have any conflict with the interests of the Company.
II. No penalty has been imposed nor any strictures have been passed by the Stock Exchanges or SEBI or any other Statutory Authority on any matter related to Capital Markets during the last three years.
III. The Company has adopted a code of conduct applicable to all Directors and Senior Management Personnel of the Company and the same has been posted on the Company's website viz. www.hbieasing.com having following web link, www.hbieasing.com/lnvestor Information/Corporate Governance. For the year under review, all directors and senior management personnel have confirmed their adherence to the provisions of said code. A declaration to this effect from Managing Director of the Company is also given to this effect at the end of this report.
IV. Risk Assessment and Minimization procedures are in existence and are reviewed periodically.
V. Whistle Blower Policy- A mandatory requirement has been reviewed by the Company and the same has been uploaded on the website of the Company viz. www.hbieasing.com having following web link, www.hbieasing.com/investor information/Corporate Governance. The Company further affirms that no personnel has been denied access to the Audit Committee.
VI. The Managing Director (CEO) and the Chief Financial Officer (CFO) of the Company has, as required under Clause 49 of the Listing Agreement, given the certificate on the review of financial statements, including Cash Flow, for the year ended 31st March, 2015 to the Board of Directors.
VII. All the mandatory requirements under Clause 49 (relating to Corporate Governance norms) of the Listing Agreement are being adhered to / complied with.
6. MEANS OF COMMUNICATION
I. Quarterly Results: Dissemination through Stock Exchange, Company's Website and through publication in newspaper as required under Listing Agreement.
II. Newspaper wherein results normally published: Business Standard (Hindi & English).
III. Website where displayed: www.hbleasing.com
IV. The website also displays official news releases and important communications made to Stock Exchange. As and when any presentation is made to institutional investors the same would be simultaneously uploaded on the Company's Website.
7. GENERAL SHAREHOLDER INFORMATION
I. Ensuing Annual General Meeting Date, time and venue:
Location GIA House, I.D.C., Mehrauli Road, Opp. Sector 14, Gurgaon (Haryana) - 122 001
Date : 09th September, 2015
Time ; 03.00 P. M.
II. Financial Year :1st April 2014 to 31st March 2015.
III. Date of Book Closure :03rd September, 2015 to 09th September, 2015.
IV. Dividend Payment Date : No dividend is being declared for year under review.
V. Listing on Stock Exchanges : The Company's Equity Shares are listed at
Bombay Stock Exchange Limited (BSE), Mumbai.
VI. Stock Code : The Company's Scrip Code at BSE is 508956.
VII. Dematerialization of Share and Liquidity:
The trading in the Equity Shares of the Company has come under compulsory dematerialization w.e.f. 26th February 2001 in terms of the SEBI-Notification No. SMDRP/ POLICY/CIR - 23 / 2000 dated 29th May 2000.
The Company has joined the National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL). The ISIN No. allotted to the Company is INE549B01016. As at 31st March 2015, 74,09,619 Equity Shares of the Company are held in dematerialized form constituting 66.98% of the Company's subscribed share capital.
XI. Share Transfer System
Share Transfers are registered and returned within a period of thirty (30) days from the date of receipt, if the documents are clear in all respects. The authority for transfer of shares has been delegated to the Managing Director for transfer of shares up to a fixed number beyond which the matters are placed before the shareholders Committee, which meets as and when required. As reported by Company's RTA all valid requests for transfer during the year under review were transferred within stipulated time limit.
XIV. The Company has no outstanding GDRs/ ADRs/ Warrants or any other instruments convertible into equity.
XV. Compliance Officer: Company Secretary of the Company acts as the Compliance Officer.
XVI. Registrar and Transfer Agents: RCMC Share Registry Pvt. Ltd.
B-25/1, First Floor, Okhla Industrial Area, Phase-II, New Delhi - 110 020 Phone: 011 - 26387320, 26387321, 26387323 Fax : 011 - 26387322 E-mail: email@example.com
XVII. Address for Correspondence:
HB Leasing and Finance Company Limited
HB House, Plot No. 31, Echelon Institutional Area, Sector-32, Gurgaon - 122 001, Haryana. E-mail: firstname.lastname@example.org