Corporate Governance
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Corporate Governance
Scope of Purpose
At Micro Green Housing Finance Private Limited (‘the Company’), we
believe that sound governance practices are must for the functioning of
the Company and for creation of value for its stakeholders on a
sustainable and long-term basis.
In order to adopt best practices and greater transparency in the
operations of the Company and in compliance with the Guidelines on
Corporate Governance issued by the National Housing Bank, and Master
Direction – Non-Banking Financial Company - Housing Finance Company
(Reserve Bank) Directions, 2021 issued by Reserve Bank of India (“RBI”)
(as amended from time to time) the Company has framed these Internal
Guidelines on Corporate Governance.
Board Of Directors
The Company’s Board has a primary role of trusteeship to protect and
enhance stakeholders value through supervision and strategic inputs. The
Board along with its committees provides supervision and exercises
appropriate controls and in addition to basic governance issues, the
Board lays strong emphasis on transparency, accountability and
integrity. The Board shall have a suitable combination of Executive and
Non-Executive Directors, with preferably atleast one-woman Director. All
the Directors shall meet the ‘fit and proper’ criteria as prescribed by
the National Housing Bank and RBI.
All the Directors on the Board (except Independent Directors) are liable
to retire by rotation and one third of such Directors shall retire at
every Annual General Meeting of the Company. The Directors who are
longest in office shall retire and in accordance with the provisions of
applicable laws shall be eligible for re-election.
A Director shall not hold the office of director in more than 20
(twenty) companies including 10 (ten) public companies. The Directors
shall submit disclosures as required under the provisions of applicable
laws and the codes and policies adopted by the Company.
A Director shall not be a Member in more than 10 Committees or shall not
act as Chairman of more than 5 Committees across all Companies in which
he is a Director.
All the Directors shall make the necessary annual disclosure regarding
their change in concern or interest in any company or companies or
bodies corporate, firms, or other association of individuals including
shareholding, directorships and committee positions and shall intimate
changes as and when they take place.
The Board of Directors shall lay down a Code of Conduct for Senior
Management of the Company. Senior Management Personnel shall affirm
compliance with the code on an annual basis.
The Directors shall not disclose any confidential information, including
commercial secrets, technologies, advertising and sales promotion plans,
unpublished price sensitive information, during their term or following
termination (by whatever means) to third parties unless expressly
approved by the Board or required by law.
Meetings of the Board
At least 4 meetings of the Board of Directors shall be held every year,
with a maximum time gap of 120 (one hundred and twenty) days between two
Board meetings. The minimum information to be statutorily made available
to the Board shall be furnished to the Directors before the meeting.
The decisions of the Board shall be taken by simple majority of the
Directors and each Director shall exercise one vote.
The Quorum for a Meeting of the Board shall be one-third of the total
strength of the Board, or two Directors, whichever is higher and the
same shall be maintained for the entire meeting.
The Independent Directors of the Company shall meet at least once in a
year without the presence of Non – Independent directors and the
Management in terms of Schedule IV of the Companies Act, 2013.
Board Independence
Independent Directors are expected to play a key role in the
decision-making process of the Board by participating in the process of
framing the overall strategy of the Company. The Independent Directors
should strive to bring in an independent, impartial and objective view
to discussions at the meetings of the Board and its Committees and they
shall act in a way that is in the best interest of the Company and its
stakeholders.
Independent Directors appointed on the Board of the Company shall
fulfill the criteria of independence as set out under the provisions of
Companies Act, 2013 and other applicable laws in this regard from time
to time. They shall submit an annual declaration affirming compliance
with the criteria of independence for every financial year and such
declaration shall be submitted whenever there is any change in
circumstances which may affect their independence.
An Independent Director shall hold office for such term as may be
appointed by the Board and shareholders of the Company such that the
appointment shall be made subject to the applicable provision of the
Companies Act, 2013 (Act) read with Schedule IV of the Act and the
Independent such appointed shall be eligible for re- appointment for
another term of up to five consecutive years on passing of a special
resolution by the Company. Provided that an Independent Director, who
completes two consecutive term(s) shall be eligible for appointment as
Independent Director in the Company only after the expiration of three
years of ceasing to be an Independent Director in the Company.
Board Compensation Review
The remuneration payable to the Director(s) shall be determined by the Nomination and Remuneration Committee and shall be recommended to the Board for its consideration and approval. The remuneration payable shall be in accordance with the Board approved Remuneration Policy and applicable laws. Additionally, subject to the Shareholders approval the Company may pay to the eligible Independent Directors pursuant to the provisions of Sections 149(9), 197 and 198 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and Schedule IV to the Companies Act, 2013 (“including any statutory modification(s) or re- enactment thereof, for the time being in force) for payment of remuneration by way of commission which shall not exceed 1% of the Net Profit of the Company in lieu of their valuable contribution and services to the Company.
Committees
The Board shall constitute several committees to deal with specific
matters and for operational convenience, delegated powers for different
functional areas to different Committees in accordance with the
applicable laws. The Audit Committee, the Nomination and Remuneration
Committee, the Risk Management Committee, the Asset-Liability Management
Committee, the Grievance redressal committee and other Committee(s) have
been constituted in accordance with the applicable provisions of the
Companies Act, 2013, guidelines / directions issued by the National
Housing Bank and/or Reserve Bank of India as applicable to the Company.
The composition, terms of reference and functioning of the Committee(s)
shall be decided by the Board of Directors in accordance with the
provisions of the applicable laws.
Minutes/Summary of meetings of Board Committees and other Committee(s)
as specified by the Board shall be placed before the Board for its
perusal, discussion and noting. The decisions of the Committees shall be
taken by simple majority of the members of the respective Committees and
each member shall exercise one
Details of various Committee(s) are as under
1. Audit Committee
The Audit Committee shall be responsible to deal with all material
questions concerning the auditing and accounting policies of the Company
and systems or any other function as may be determined by the Board.
The members of the Audit Committee shall meet at such intervals as and
when required, but shall meet atleast 4 (four) times in a financial
year.
Terms of reference of Audit Committee are as under:
- Recommendation for appointment, remuneration and terms of appointment of the auditor of the company;
- Review and monitor the auditor’s independence and performance, and effectiveness of audit process;
- Examination of the financial statement and the auditors’ report thereon;
- Approval/ Recommendation to the Board or any subsequent modification of transactions of the Company with related parties;
- Scrutiny of inter-corporate loans and investments;
- Valuation of undertakings or assets of the Company, wherever it is necessary;
- Evaluation of internal financial controls and risk management systems;
- Monitoring the end use of funds raised through public offers and related matters.
- Any other responsibility as assigned by the board from time to time and applicable provisions of the Companies Act and/or directions issued by the NHB.
- All the Members of Audit Committee shall be financially literate and at least one member shall have accounting or related financial management expertise.
- The Chairman of the Audit Committee shall be an Independent Director, whenever applicable as per Companies Act, 2013.
- The Committee shall meet at least four times in a year with a maximum interval of not more than one hundred and twenty days in between two days.
- The quorum shall be either two Members or one third of the Members whichever is greater.
2. Nomination & Remuneration Committee
The Nomination and Remuneration Committee shall be responsible to
The Nomination and Remuneration Committee shall be responsible to (i)
deal with nomination, appointment and remuneration of Directors on the
Board; (ii) decide on remuneration packages (including pension rights,
employee’s stock options and compensation payments, etc.) of the
eligible Directors and Senior-level employees; (iii) decide on
appraisal, performance bonus and variable pay of all employees including
Non-Executive Independent Directors in compliance with applicable laws
and (iv) the related matters in accordance with the applicable laws.
The members of the Nomination and Remuneration Committee shall meet at
such intervals as and when required, but shall meet atleast once every
financial year.
Performance Evaluation
The Nomination and Remuneration Committee of the Company shall evaluate the performance of the individual Directors, the Board, as a whole and its Committees and subject to the applicable provisions of the Companies Act, 2013. The Nomination and Remuneration Committee shall provide an overview Report of the evaluation conducted by it, to the Board for their discussion and analysis.
Corporate Social Responsibility Committee (CSR)
The constitution and the terms of reference of the Corporate Social
Responsibility Committee shall be in compliance with the provisions of
section 135(1) of the Companies Act, 2013 (“the Act”) and the Rules
framed thereunder and Schedule VII of the Act.
The CSR Committee shall decide upon the corporate social responsibility
activities of the Company and the CSR expenditure to be incurred by the
Company and recommend the same to the Board for its consideration and
approval. The Committee shall be responsible for monitoring the CSR
Policy of the Company.
The Corporate Social Responsibility Committee shall consist of two or
more Directors, out of which at least one Director shall be an
Independent Director.
The members of the CSR Committee shall meet at such intervals as and
when required, but shall meet atleast 2 (two) times in a financial year.
4. Asset-Liability Management Committee (ALCO)
The ALCO shall monitor the asset liability composition of the Company’s
balance sheet and determine actions to mitigate risks associated with
the asset liability mismatches. The ALCO's primary goal is to evaluate,
monitor and approve practices relating to risk due to imbalances in the
capital structure.
The ALCO is a decision-making unit responsible for integrated balance
sheet management from risk-return perspective including the strategic
management of interest rate and liquidity risks of the Company. It is
responsible for deciding the business strategy of the Company with the
assets and liabilities perspectives, in line with the Company’s budget
and decided risk management objectives.
The ALCO is responsible to
- borrow from bank/ financial institution/ NBFC / National Housing Bank within the overall limit as specified by Board of Directors and shareholders of the Company
- pass necessary resolutions for opening the bank accounts as may be necessary to avail the borrowing facilities and to avail net banking facility for said accounts
- to pass necessary resolutions for opening the bank accounts as may be necessary for placing fix deposit with the banks
- to pass necessary resolution for addition/deletion of signatories of the existing bank accounts and for change in instructions for placing fixed deposits with the banks
- to secure the borrowings of the Company by mortgage or charge on all or any of the movable or immovable properties of the Company in favour of banks / financial institutions / NBFC / National Housing Bank
- to approve Securitisation/ Direct Assignment transaction with such Identified Banks as it may deem fit
ALCO shall consist of executive directors and senior management of the
company as ALCO deems fit. The members of the ALCO shall meet at such
intervals as and when required, but shall meet atleast 2 (two) times in
a financial year.
Minutes of ALCO shall be presented to the Risk management committee of
the Board for evaluation.
Risk Management Committee
The Risk Management Committee shall be responsible for setting up and
reviewing risk management policies of the Company from time to time. The
Risk Management Committee shall primarily be responsible for
identifying, monitoring, managing and mitigating the credit risk, market
risk, liquidity risk, operational risk and other risks of the Company
that can be applicable to the Company considering the business
operations of the Company through integrated risk management systems,
strategies and mechanisms.
The Committee is expected to supervise, guide, review and identify
current and emerging risks; developing risk assessment and measurement
systems, establishing policies, practices and other control mechanisms
to manage risks, developing risk tolerance limits for Senior Management
and board approval, monitoring positions against approved risk tolerance
limits, reporting results of risk monitoring to senior management and
the board.
The Risk Management framework of the Company is also guided and
supervised by the Risk Management Committee (“RMC”). While the Board of
Directors has overall oversight on the Governance, Risk and Compliance
framework of the Company, the RMC reviews various risks assumed by the
Company and provides its guidance on mitigation/ management of various
risks.
If the Members of the Risk Management Committee have a conflict of
interest, matter will be referred to the Board of Directors for final
resolution.
The quorum for the meetings of the Risk Management Committee shall be
any two Directors personally present. The members of the Risk Management
Committee shall meet at such intervals as and when required, but shall
meet atleast 2 (two) times in a financial year.
6. Grievance Redressal Committee (“GRC”)
The GRC ‘s responsibility is to review functioning of the Customer Grievance Redressal Mechanism of the Company with an objective to ensure adherence of Fair Practices Code by the Company at all levels and guide the Company accordingly.
7. IT Strategy Committee
The Committee’s responsibility is to review and decide IT strategy &
framework of the Company in line with the Corporate Strategy & Business
Planning, to review IT related policies, Cyber Security arrangements and
any other matter related to IT Governance of the Company.
The IT Strategy Committee shall be formed to carry out review and amend
the IT strategies in line with the overall strategies of the Company,
and to review cyber security arrangements and any other matter related
to IT Governance.
The IT Strategy Committee shall be responsible for recommending IT
related policies and other security policies, evaluating new threats and
reducing the risk of intrusion, loss of data integrity, compliance
violations, and the committee is also responsible for role-based access
controls, resource allocation, documentation, and reporting.
The committee meets at least once a year to approve and recommend to the
board all IT related policies, and oversee the IT investments, and
implementation of IT infrastructural and application projects and
strategy.
In addition to above, the Board has constituted several other
Committees as may be required for effective functioning of the Company
and as per applicable laws for the time being in force.
Conflict Of Interest
The Company expects its Directors, officers and other employees to act
ethically at all times and to acknowledge their adherence to the
policy(ies) and code(s) adopted by the Company.
The Directors, senior management and other employees of the Company
shall endeavor to avoid any conflict of interest with respect to their
dealings with the Company. A conflict of interest exists when benefits
or interests of one person or entity conflict with the interests or
benefit of the Company. If a Director has a potential conflict of
interest in a matter under consideration by the Board or a Committee,
such Director shall disclose his interest in accordance with the
provisions of applicable laws and abstain from deliberations and voting
on such matter. A Director who is interested in any proposed transaction
shall not exercise any influence over other Board/Committee Members in
any manner whatsoever. Officers and other employees must disclose the
circumstances of any possible conflict of interest to his / her
supervisor and the Managing Director and CEO, for a determination about
whether a potential or actual conflict exists. If an actual or potential
conflict is determined, the Company may take whatever corrective action
appears appropriate according to the circumstances. Failure to disclose
facts shall constitute grounds for disciplinary action.
Auditors
Statutory Auditors
The Board and the Audit Committee of the Company shall be responsible to
appoint Statutory Auditors who demonstrate professional ability and
independence. The Company shall review the independence and performance
of the Statutory Auditors and the effectiveness of the audit process
periodically. Declaration shall be obtained from the Auditors affirming
their eligibility for being appointed as the Statutory Auditors.
Further, the Company shall rotate the partner/s of the Chartered
Accountant firm(s) conducting the statutory audit of the Company every
three years or such other earlier period as may be decided by the Board,
so that same partner does not conduct audit of the company continuously
for more than a period of three years. However, the partner so rotated
shall be eligible for conducting the audit of the Company after an
interval of three years.
The Company shall also be in compliance with various circulars and
notification issued by Reserve Bank of India from time to time,
including the circular dated April 27, 2021, pertaining to “Guidelines
for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors
(SAs)”, as amended from time to time.
Internal Auditors
The Board and the Audit Committee of the Company shall appoint Internal Auditors in accordance with the applicable provisions of the Companies Act, 2013 who shall perform independent and objective assessment of the internal controls, processes and procedures instituted by the management and accordingly monitor its adequacy and effectiveness.
Secretarial Auditors
The Board shall appoint an independent company secretary in practice, in accordance with the provisions of the Companies Act, 2013 and Rules made thereunder to conduct a secretarial audit of the Company for every financial year. The Secretarial Auditor shall provide its report in the form and manner prescribed under the applicable laws / regulations. The Secretarial Audit Report shall be placed before the Board for its noting and records and the same be annexed to the Board’s Report which shall be circulated to the members of the Company in accordance with the applicable laws / regulations.
Code(s) And Policy(ies) Of The Company
Code of Conduct for Directors and Employees
The Code of Conduct for Directors and Employees provides for employees to conduct their business and affairs in compliance with applicable laws, rules and regulations of India. The Code is applicable to all employees of the Company, including Executive Director(s) and to the Non-Executive Director(s) to the extent of their role and responsibilities in the Company.
Whistle Blower Policy / Vigil Mechanism
The Whistle Blower Policy / Vigil Mechanism is formulated to provide a mechanism to anyone connected with the Company to approach and disclose unethical and improper practices or any other wrongful conduct in the Company and to prevent managerial personnel from taking any adverse action against person(s) reporting such matters.
Related Party Transaction Policy
The Related Party Transactions Policy is adopted to ensure proper approval and reporting of transactions between the Company and its Related Parties. Any transaction with a Related Party shall be considered to be appropriate only if it is in the best interest of the Company and its Members. The Board or any of its Committees which are dealing with related party transaction(s), shall accord their approvals for such transactions in compliance with the applicable laws and the Related Party Transaction Policy of the Company.
Policies Adopted By The Company
The Company shall adopt such policies, as may be required to adopt under
the Companies Act, 2013, any regulatory requirements applicable to the
Company, and such other laws and regulations as may be applicable.
The policies adopted may be reviewed by the Board from time to time.
The Secretarial Auditor shall provide its report in the form and manner
prescribed under the applicable laws / regulations. The Secretarial
Audit Report shall be placed before the Board for its noting and records
and the same be annexed to the Board’s Report which shall be circulated
to the members of the Company in accordance with the applicable laws /
regulations.
Disclosures
The Company is committed to make adequate disclosures based on the
principles of transparency, timeliness, fairness and continuity. The
Board of Directors and employees of the Company shall ensure and make
necessary disclosures to the Company, the Regulator(s) / Statutory
Authorities, the Shareholders, Investors, Members or other stakeholders
as may be required by the applicable laws and the codes / policies of
the Company.
The Board of Directors of the Company or such other person authorized by
the Board or any law / regulation, shall ensure that all the disclosures
statutorily required to made on behalf of the Company are duly made to
the Regulatory/ Statutory authorities or such other persons as maybe
required under applicable laws / regulations.
Compliance Officer
A qualified Chartered Accountant and/or Company Secretary shall be the Compliance Officer of the Company. The Compliance Officer shall, inter-alia, be responsible for setting forth policies / procedures and ensuring conformity with the applicable laws/ regulations/ guidelines including Companies Act, SEBI Listing Regulations and RBI Directions/guidelines, issued from time to time.
Review
The Board of Directors of the Company reserves the right to add, amend, modify this Corporate Governance Guidelines, as and when it deems appropriate.
Disclaimer
While this policy has been made as informative as possible and
structured to ensure quick and easy interpretation by all. As and when
there’s an amendment to this policy, the updated policy document will be
shared through the appropriate channel of communication.
In case of any ambiguity related to understanding of this policy, the
final interpretation by the management will be considered as
applicable.
Proposed Committees or any other part of this policy would be suitably
constituted / amended as an when applicable / required by NHB/RBI/any
other regulatory body.