Policy on Related Party Transactions and Materiality
1. Introduction __________________________________1
2. Objective_____________________________________1
3. Clarifications, Amendments and Updates____________1
4. Definitions____________________________________1
5. Scope________________________________________ 3
6. Identification of Related Parties____________________3
7. Review and Approval of Related Party Transactions____3
8. Policy_________________________________________5
9. Ratification of Exceptional Cases ___________________6
10. Exemptions_________________________________6
11. Disclosures ____________________________________7
12. Policy Review__________________________________7
1. Introduction: -
Alpa Laboratories Limited ("the Company") recognizes the importance of maintaining transparency, fairness, and accountability in all its dealings, particularly in related party transactions. The Company recognises that Related Party Transactions present potential or actual conflicts of interest and may raise questions about whether such transactions are in the interest of the Company. The goal is to ensure transparency, fairness, and compliance with legal provisions while safeguarding the interests of the Company and its stakeholders.
The Board of Directors of the Company, on recommendation of the Audit Committee, has adopted this policy to regulate Related Party Transactions of the Company in compliance with various applicable laws, including under the Companies Act 2013 and the provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “SEBI LODR”), prescribed for related party transactions, while promoting the ethical conduct of business and protecting the interests of the Company, its shareholders, and other stakeholders.
2. Objective: -
The primary objective of this Policy is to:
● Establish a framework for identifying and approving related party transactions (RPTs).
● Ensure that all related party transactions are conducted at arm’s length and in the best interests of the Company and its stakeholders.
● Ensure compliance with applicable provisions under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, regarding RPTs.
● Promote transparency and accountability in the disclosure and reporting of RPTs.
3. Clarifications, Amendments and Updates: -
This Policy shall be implemented as per the provisions of the applicable law. Any amendments in the applicable law, including any clarification/ circulars of relevant regulators, shall be read into this Policy such that the Policy shall automatically reflect the contemporaneous applicable law at the time of its implementation.
All words and expressions used herein, unless specifically defined, shall have the same meaning as respectively assigned to them, under the applicable law under reference, that is to say, the Companies Act, 2013 and Rules framed thereunder, or SEBI LODR Regulations, as amended, from time to time.
4. Definitions: -
For the purpose of this Policy, the following terms will have the meaning described below:
❖ “Act” means the Companies Act, 2013 including any amendment or modification thereof.
❖ “Arm’s Length Transaction” means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.
❖ “Applicable Law” means the Companies Act, 2013 and the rules made thereunder, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR”) and Indian Accounting Standards (including any modifications/ re-enactments thereof) and includes any other statute, law, standards, regulations, circulars or other governmental instruction relating to Related Party Transactions applicable on the Company.
❖ “Material Related Party Transactions under SEBI (LODR) Regulations, 2015” means
A Transaction with a related party shall be considered as material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year exceeds Rupees One Thousand Crores or ten percent of the annual consolidated turnover of the Company as per the last audited financial statements whichever is lower or such sum as may be prescribed under Listing Regulations and as amended from time to time.
B A transaction involving payments made to related party with respect to brand usage or royalty shall be considered material if the transaction to be entered into individually or taken together with previous transactions during a financial year exceeds five percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company.
❖ “Material Related Party Transactions under the Act, 2013” means transactions as defined under Section 188(1) of the Act, 2013 by the Company with Related Parties as defined under Section 2(76) of the Act, 2013 where the aggregate value of the transaction/ transactions to be entered into individually or taken together with previous transactions during a financial year, exceeds the limits as prescribed under the Act, 2013 from time to time.
❖ “Relative(s)” shall have the same meaning as assigned to it under Section 2(77) of the Companies Act, 2013 and the Rules made thereunder and Regulation 2(1)(zd) of SEBI LODR.
❖ “Related Party” means an individual or an entity who is “related” to the Company in terms of
- A. Section 2(76) of the Act, 2013
- B. Regulation 2(1)(zb) of the SEBI (LODR) Regulations, 2015
- C. Ind AS 24, as amended from time to time
❖ “Related Party Transactions” mean contracts or arrangements between a company and its related parties with respect to transactions covered in
- A. Section 188 of the Act, 2013
- B. Regulation 2(1 )(zc) of SEBI (LODR) Regulations, 2015
- C. Ind AS 24, as amended from time to time
❖ “Ordinary course of business” means transactions which are entered into in the normal course of the business pursuant to or for promoting or in furtherance of the company’s business objectives, as per the charter documents of the company i.e., Memorandum & Articles of Association of the Company.
To decide whether an activity which is carried on by the business is in the ‘ordinary course of business’, the following factors may be considered:
- Whether the activity is covered in the objects clause of the Memorandum of Association
- Whether the activity is in furtherance of the business
- Whether the activity is normal or otherwise routine for the particular business
- Whether the activity is repetitive/frequent
- Whether the income, if any, earned from such activity/transaction is treated as business income in the company’s books of account
- Whether the transactions are common in the particular industry
- Whether there is any historical practice to conduct such activities
- The financial scale of the activity with regard to the operations of the business.
5. Scope: -
This Policy applies to all transactions between the Company and its related parties, as defined under the Companies Act, 2013, and SEBI (LODR) Regulations.
6. Identification of Related Parties: -
- Each Director, Key Managerial Personnel whenever wishes to enter into a Related Party Transaction with the Company involving either him/ her or his /her Relative, shall give a Notice to the Company along with all the relevant details and documents.
- Notice of any Related Party Transaction, shall be given well in advance so that the Company has adequate time to obtain additional information or document about the proposed Related Party Transaction, if necessary, which is required to be placed before the Audit Committee to enable it to approve the Related Party Transaction.
- All Related Party Transactions, including any amendment or modification thereof, shall be placed before the Audit Committee of the Company for approval. The Audit Committee shall ensure that transactions are fair, transparent, and in the best interest of the Company and its shareholders.
- Directors and Key Managerial Personnel are required to disclose the names of their relatives and other related parties at the time of their appointment or at the time when such relationships are established or modified.
7. Review and Approval of Related Party Transactions : -
A. Audit Committee Approval: All Related Party Transactions (including all prospective transactions) and subsequent Material Modifications shall require prior approval of the Audit Committee. Only those members of the Audit Committee, who are independent directors, shall approve Related Party Transactions.
The Company shall provide to the Committee all relevant material information of all Related Party Transaction(s) in compliance with Companies Act and SEBI Listing Regulations.
In determining whether to approve a Related Party Transaction, the Committee will consider the following factors, among others, to the extent relevant to the Related Party Transaction:
(i) Whether the terms of the Related Party Transaction are fair and on arm’s length basis to the Company and would apply on the same basis if the Transaction did not involve a Related Party;
(ii) Whether the Related Party Transaction would affect the independence of the Director/KMP;
(iii) Whether the proposed Transaction includes any potential reputational risk issues that may arise as a result of or in connection with the proposed transaction; and
(iv) Whether the Related Party Transaction is in the nature of conflict of interest for any Director or Key Managerial Personnel of the Company, taking into account the size of the Transaction, the overall financial position of the Director or other Related Party, the direct or indirect nature of the Directors, Key Managerial Personnel or other Related Parties interest in the Transaction and the ongoing nature of any proposed relationship and any other factors the Board/Committee deems relevant.
(v) Whether there are any compelling business reasons / rationale for the Company to enter into the Related Party Transaction and the nature of alternative transactions, if any.
Subject to the provisions of the applicable laws, the Audit Committee will have the discretion to approve/modify/reject/recommend/refer to the proposed Related Party Transaction for the approval of the shareholders, if required.
B. Omnibus approval : The Audit Committee may grant omnibus approval for Related Party Transactions proposed to be entered into by the Company subject to the following conditions:
(i) The Audit Committee shall lay down the criteria for granting an omnibus approval in line with this Policy and such approval shall be applicable in respect of Related Party Transactions which are repetitive in nature.
(ii) The Audit Committee shall satisfy itself of the need for such omnibus approval and that such approval is in the interest of the Company.
(iii) Such omnibus approval shall specify (a) the name of the Related Party, nature of Transaction, period of Transaction, maximum amount of Transaction that can be entered into, (b) the indicative base price/current contracted price and the formula for variation in the price if any, and (c) such other conditions as the Audit Committee may deem fit.
(iv) Audit Committee shall review, at-least on a quarterly basis, the details of Related Party Transactions entered into by the Company pursuant to each of the omnibus approval given.
(v) Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.
C. Board Approval: the following RPTs shall require additional, prior approval of Board of Directors:
(i) All transactions between the Company and its Related Parties which are not in the Ordinary Course of Business, or not proposed to be executed as an Arm’s length transaction.
(ii) Transactions which in the opinion of the Audit Committee, need special consideration / determination by the Board.
Where any director is concerned or interested in any potential RPT, such director shall abstain from discussion and voting when such a transaction is being considered.
D. Shareholder Approval: the following RPTs shall require the prior approval of the shareholders through resolution:
(i) All Related Party Transactions in excess of the limits prescribed under the Companies Act, 2013, and the SEBI Listing Regulations, as may be applicable, which are not in the ordinary course of business or not an Arms’ length transaction shall also require the prior approval of the shareholders through resolution and no member of the Company shall vote on such resolution, if such member is a related party.
(ii) All Material Related Party transactions and any subsequent Material Modification thereto, shall require shareholders’ approval by a resolution.
The Audit Committee and the Board shall approve and recommend all Material Related Party transactions, before submitting the same for approval of the shareholders of the Company.
8. Policy: -
A. A related party transaction / contract / arrangement shall be in compliance with the provisions of the Act, Listing Regulations and applicable rules and regulations, as amended from time to time
B. All related party contracts / arrangements shall be entered on an arm’s length basis.
C. Related party contracts / arrangements may deviate from the principle of arm's length basis, provided:
(a) it is specifically permitted by law or specifically not prohibited by law; and
(b) after prior approval from the Audit Committee, Board of Directors and shareholders, as may be required.
D. Audit Committee shall grant an omnibus approval in respect of each financial year prior to the start of the year to RPTs in accordance with the Act, Rules & Listing Regulations.
E. The Audit Committee shall review on a periodical basis:
I The related party transactions undertaken during the period under consideration;
II The status of related party transactions undertaken under omnibus approval granted by the Committee for the year.
III status of long term (more than one year) or recurring related party transactions on an annual basis
F. Any Director or Key Managerial Personnel who is interested in any Related Party Transaction shall not be present at the meeting of the Board or Audit Committee during discussions on the subject matter of the resolution relating to such transaction.
9. Ratification of Exceptional Cases: -
- Any transaction, contract or arrangement entered into by the Company with a Related Party, without obtaining the consent of the Board of Directors or approval of shareholders by a Special Resolution of the General Meeting, can in genuine cases be ratified by the Board of Directors or the shareholders at a General Meeting, as permitted in the Act,
- If the approval sought from the Board of Directors and the shareholders is not granted, the transaction, contract or arrangement shall stand cancelled with immediate effect and the Director or the concerned employee shall be liable to indemnify the losses, if any, caused to the Company on account of the said Related Party Transaction.
10. Exemptions: -
Notwithstanding the foregoing, but subject to the provisions of the applicable laws from time to time, this Policy shall not apply to the following Related Party transactions and such transactions shall not require approval of Audit Committee or shareholders:
(i) transactions entered into between the Company and its wholly owned Subsidiary whose accounts are consolidated with the Company and placed before the shareholders at the general meeting for approval.
(ii) transactions entered into between two wholly-owned Subsidiaries of the Company, whose accounts are consolidated with the Company and placed before the shareholders at the general meeting for approval.
(iii) transactions entered into by the Company in the ordinary course of business and on an arm’s length basis, unless such transactions are specifically identified as related party transactions.
11. Disclosures: -
- The Company shall maintain a register pursuant to Section 189 of the Act and enter therein the particulars of all the Related Party Transactions with a Related Party.
- Every transaction, contract or arrangement entered into with Related Parties shall be referred to in the Report of the Board of Directors to the shareholders along with the justification for entering into such transaction, contract or arrangement.
- The Company shall make disclosures of all Related Party Transactions on a quarterly basis to the Stock Exchange(s) in the prescribed format as required under Regulation 23 of the SEBI (LODR) Regulations, 2015.
12. Policy Review: -
This Policy may be amended, modified or supplemented from time to time to ensure compliance with any modification, amendment or supplementation to the SEBI LODR or as may be otherwise prescribed by the Audit Committee/ Board from time to time. The Policy shall be mandatorily reviewed by the Board of Directors at least once every three years.