Policy on Dealing with Related Party Transactions

1.  Background
Related party transactions can present a potential or actual conflict of interest which may be against the best interest of the company and its shareholders. Considering the requirements for approval of related party transactions as prescribed under the Companies Act, 2013 (“Act”) read with the Rules framed there under and Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), MORGAN VENTURES LIMITED  (“MVL” or “the Company”) is required to formulate a Policy for identification of related parties and the proper conduct and documentation of all related party transactions.
Further, Regulation 23(1) of the SEBI Listing Regulations requires a company to formulate a policy on materiality of related party transactions and dealing with related party transactions.
In light of the above, “MVL”  has framed this Policy on Related Party Transactions (“Policy”) to ensure high standards of Corporate Governance while dealing with related parties.

2.   Objective of the Policy
The objective of this Policy is to set out (a) the materiality thresholds for related party transactions;
(b) the manner of dealing with the transactions between the Company and its related parties based on the Act, the SEBI Listing Regulations and any other laws and regulations as may be applicable to the Company; and (c) lay down the guiding principles and mechanism to ensure proper approval, disclosure and reporting of transactions as applicable, between the Company and any of its related parties in the best interest of the Company and its stakeholders.

3.  Definitions
All terms used in this Policy will have the meanings as assigned to them under the Act and the Rules made thereunder, SEBI Listing Regulations and applicable Accounting Standards, as amended from time to time.

4. Materiality Thresholds
Regulation 23 of the SEBI Listing Regulations requires a company to lay down materiality thresholds for transactions beyond which approval of the shareholders through a resolution will be required.
MVL has fixed its materiality thresholds at the level prescribed under explanation to Regulation 23(1) of the SEBI Listing Regulations as under:

• In case of transaction involving payments made to a related party with respect to brand usage or royalty, if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds five percent (5%) of the annual consolidated turnover of the Company as per its last audited financial statements.
• In case of any other Transaction, if the amount of the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds (Rs. 1,000 crore or)* 10% of the annual consolidated turnover of the Company as per its last audited financial statements, (whichever is lower)*.

5. Manner of dealing with related party transactions

• Identification of related parties
  The Company has formulated a Framework for identification and updating the list of related parties as prescribed under Section 2(76) of the Act read with the Rules framed there under, Regulation 2(1)(zb) of the SEBI Listing Regulations and applicable Accounting Standards, as amended from time to time.
• Identification of related party transactions
  The Company has formulated a Framework for identification of related party transactions in accordance with Section 188 of the Act and Rules framed thereunder, and Regulation 2(1)(zc) of the SEBI Listing Regulations. The Company has also formulated a Framework for determining whether the transaction is in the ordinary course of business and at arm’s length basis and for this purpose, the Company may seek external professional opinion, if necessary.
  Review and approval of related party transactions
  
  • Every related party transaction shall be subject to the prior approval of the Audit Committee whether at a meeting or by resolution by way of circulation. Provided that only those members of the Audit Committee, who are Independent Directors, shall approve such related party transactions. Further, any member of the Audit Committee who has a potential interest in any related party transaction shall abstain from discussion and voting on the approval of the related party transaction.
  • However, the Audit Committee may grant omnibus approval for recurring transactions with related parties, in compliance with requirements of the Act and the SEBI Listing Regulations. The Audit Committee shall review / note on a quarterly basis the details of such related party transactions entered into by MVL pursuant to each of the omnibus approval given. The omnibus approval shall be valid for a period of one year.
    Where the need for related party transaction cannot be foreseen and requisite details are not available, Audit Committee may grant omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.
  • The Audit Committee shall determine whether the transaction does, in fact, constitute a related party transaction requiring compliance with this Policy.

6. Approval Matrix for related party transaction is, as under:

• The Board’s Report will contain details of contracts or arrangements or transactions (i) not at arm’s length basis and (ii) material (based on the thresholds laid down under Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014) contracts or arrangement or transactions at arm’s length basis and/or in ordinary course of business, along with justification for entering into such transaction in accordance with the requirements of Companies Act, 2013 and rules made thereunder.
• The Company shall submit disclosures of related party transactions along with the financial results for the half year on a standalone / consolidated basis, in the format specified by the SEBI, from time to time, and publish the same on its website.
• The Company shall also provide details of all material related party transactions (laid down in Clause 4 of the Policy above) on a quarterly basis to the stock exchanges along with the Compliance Report on Corporate Governance.

7. Review of the Policy
This Policy shall be reviewed by the Board as and when any changes are to be incorporated in the Policy due to change in applicable law or at least once in every three years and updated accordingly based on the recommendations of the Audit Committee.
Provisions of this Policy would be subject to revision / amendment in accordance with the Rules, Regulations, Notifications, etc. on the subject as may be issued by relevant statutory authorities, from time to time. In case of any amendment(s), clarification(s), circular(s), etc. issued by the relevant authorities, not being consistent with the provisions laid down under this Policy, then such amendment(s), clarification(s), circular(s), etc. shall prevail upon the provisions hereunder and this Policy shall stand amended accordingly from the effective date as laid down under such amendment(s), clarification(s), circular(s), etc.