Preface

Pursuant to the Housing Finance Companies-Corporate Governance (NHB) Directions, 2016 as amended from time to time (“Master Directions”) vide notification no. NHB(ND)DRS/REG/MC- 07-2019 dated July 1, 2019, the Board of Directors (“Board”) of Micro Green Housing Finance Private Limited (the ‘Company’ or ‘MGHF’), has framed and adopted the Policy on Fit & Proper Criteria for Directors (“Policy” or “this Policy”).

Objectives

The objective of the Policy is to set out the ‘fit and proper’ criteria based on which new directors proposed to be appointed and existing directors whose appointment is intended to be continued can be evaluated.
The Company believes that this policy will aid the Company’s constant endeavour to ensure that only individuals of high caliber and who possess the right blend of qualifications, expertise, track record and integrity are appointed on the Board.

Scope and Application

The Policy shall apply in respect of appointment of directors as the Board of Directors of the Company as well as continuation of the appointment of the directors on the Board.
This policy solely comprises the mandatory requirements as mentioned in the Housing Finance Companies – Corporate Governance (National Housing Bank) Directions, 2016.

Definitions

• “Company” or “HFC” means Micro Green Housing Finance Private Limited
• “Board” means the Board of Directors of the Company
• “Nomination and Remuneration Committee or NRC” means the Nomination and Remuneration Committee of the Board of Directors of the Company constituted under provisions of the Companies Act, 2013.
• "Director” mean an individual appointed as a Director on the Board of the Company
• “Policy” means this Policy on Fit and Proper Criteria for Directors

Role of Nomination and Remuneration Committee

The Nomination and Remuneration Committee of the Company shall:

• Obtain and analyze information / documents for determining the qualifications, positive attributes for appointment of Director(s) and independence of Independent Director(s);
• Carry out the due diligence to determine the suitability of the person for appointment/ continuing to hold appointment as a director of the Company;
• Scrutinize the Declaration and Undertaking and Deed of Covenant received from the directors of the Company; and
• Recommend to the Board, the appointment/ re-appointment of the persons proposed to be appointed/ re-appointed as Directors after applying the fit and proper criteria as stipulated in this Policy.

Process / Manner of Selection for Appointment

Selection of the director(s) of the Company, other than the nominee directors to be appointed by the financial institutions, banks in accordance with the terms and conditions of the financing facilities availed by the Company, can inter-alia be made in any of the following ways:

• From within the Company hierarchy
• Recruitment from outside
• Selection from data bank of Independent Directors maintained in accordance with the provisions of the Act for appointment as Independent Director(s)
• Nomination from any shareholder in compliance with the applicable laws
• Any other manner as governed / directed by the prevailing relevant Policy(ies) of the Company in this regard or by the Board of Directors of the Company.

Evaluation of Fit and Proper Criteria

• Before appointing any person as a director on the Board or continuing the appointment of any such director, the NRC shall undertake adequate due diligence in respect of such individuals to ascertain suitability on the basis of the qualification, expertise, track record, integrity of such individual and also such other factors in respect of which information is obtained by the Company in the Declaration and Undertaking.
• The Company shall prior to the appointment of any person as a director on the Board obtain necessary information and declaration from the proposed / existing directors in the format given at Annex- 2 of the NHB Circular or such other format (where applicable) which may be prescribed by the NHB from time to time. Refer Annexure – 1 to this Policy for the format of such Declaration and Undertaking.
• The Company shall also obtain Deed of Covenant signed by its directors, which shall be in the format specified in Annex 3 of the NHB Circular or such other format (where applicable) which may be prescribed by the NHB from time to time. Refer Annexure – 2 to this Policy for the format of such Deed of Covenant. All directors appointed after the effective date of this Policy shall also execute the said Deed of Covenant, on or before the date on which such appointment becomes effective.
• The NRC shall scrutinize each Declaration and Undertaking received. The NRC shall after considering the result of its due diligence and the information provided in the signed Declaration and Undertaking, decide on and recommend to the Board, acceptance or otherwise of the potential new directors or existing directors whose appointment is to be continued or renewed, as the case may be.
• Without limiting the generality of the foregoing paragraphs no person shall be considered for appointment/re-appointment as a director if such person is disqualified to act as a director under applicable law.
• In order to conclude that a person’s ‘fit and proper’ to be appointed as a director on the Board or to continue in that capacity (as the case may be), the Board must be able to form a view that it would be prudent to conclude, on the basis of recommendations of the NRC, that:
  1. the person meets the fit and proper criteria expressly set out by NHB or such other or additional criteria (where applicable) as may be prescribed by NHB from time.
  2. the person possesses the qualifications, competence, technical expertise, track record, integrity and judgement to perform properly the duties of a director on the Board;
  3. the person possesses the educational or technical qualifications, knowledge and skills relevant to the duties and responsibilities as a director on the Board
  4. the person either:
     has no conflict of interest in performing such person’s duties as a director on the Board; or
     if the person has a conflict of interest, it would be prudent to conclude that the conflict will not create a material risk that the person will fail to perform such person’s duties properly and adequate disclosures are made by the person in this regard.
• The Company shall require every director on the Board to annually provide at first meeting of the Board in every financial year a simple declaration (reflecting the position as on 31st March) which either confirms that the information already provided to the Board in the Declaration and Undertaking has not undergone any change or where there is any change, specifies the requisite details of such change. Any declarations which indicate a change in the information provided in the original Declaration and Undertaking shall also be scrutinized by the NRC and the NRC shall keep the Board apprised of any such changes.

Quarterly Reporting

The Company shall provide a statement to the NHB on a quarterly basis (no later than 15 days from the end of every financial quarter) setting out the change of directors of the Company accompanying a certificate from the Managing Director of the Company confirming that the fit and proper criteria in selection of such new directors has been followed.
The statement for the quarter ending March 31, shall be certified by the auditors of the Company.

Amendments

This Policy may be amended, modified or supplemented from time to time to ensure compliance with any modification, amendment or supplementation to any notifications and directions issued by NHB or under any other law applicable to the Company, from time to time.
The Nomination and Remuneration Committee may issue /implement such guidelines, procedures, formats and/or reporting mechanisms to enforce this Policy as it may deem fit.