Companyโs philosophy on corporate governance
Kinara Capital Private Limited (Formerly Known as Visage Holdings and Finance Private Ltd) (the โCompanyโ / โKCPLโ) is a NBFC-NDSI (Non-Banking Financial Company- Non-Deposit Taking- Systemically Important) registered with Reserve Bank of India. The Company recognizes its role as a corporate citizen and endeavors to adopt the best practices and the highest standards of Corporate Governance (โCGโ) through transparency in business ethics, accountability to its customers, government, and other stakeholders. The Company’s activities are carried out in accordance with good corporate practices and the Company is constantly striving to better them and adopt the best practices.
Corporate Governance means the system of rules, practices and processes by which a company is administered and controlled. It involves balancing the interests of the various stakeholders of the company including shareholders, employees, customers and the community within which it operates. These corporate governance guidelines will help the Company in attaining its objectives/goals, since it encompasses every sphere of operations, management, action plans, internal controls and regulatory disclosure.
The Company ensures good governance through the implementation of effective policies and procedures, which is mandated and regularly reviewed by the Board or the committees of the members of the Board.
RBI guidelines on corporate governance
In pursuant to Regulation 100 of the Master Direction โ Reserve Bank of India (Non-Banking Financial Company โ Scale Based Regulation) Directions, 2023 issued by RBI and as amended from time to time, the Company has framed the following internal Guidelines on Corporate Governance.
Board of Directors
The Board shall have an optimum combination of Executive, Non-executive and Independent Directors in line with the requirements of the provisions of the Companies Act, 2013 and other Applicable Laws and the Articles of Association of the Company.
The Board of directors shall meet at least four times a year, with a maximum time gap of one Hundred and twenty days between any two meetings.
The Board shall be responsible for overall compliance with the Corporate Governance of the Company and oversee the business affairs including responsibility for the Companyโs business strategy and financial soundness, key personnel decisions, internal organization and governance structure and practices, Risk Management and compliance obligations and in doing so, the Board must act honestly, in good faith and in the best interests of the Company. The Board should ensure that the Companyโs organizational structure enables the Board and SMP (SMP shall mean Senior Managerial Personnel of the Company who are members of its core management team excluding Board of Directors comprising all members of management one level below the executive directors, including the Department Heads reporting to KMPs) to carry out their responsibilities and facilitates effective decision making and good governance. This includes clearly laying out the key responsibilities and authorities of the Board itself, of Senior Management and of those responsible for the control functions.
The Board should actively engage in the major matters of the Company and keep up with material changes in the Companyโs business and the external environment as well as act in a timely manner to protect the long- term interests of the Company.
Duties and Responsibilities of Board of Directors
In accordance with the provisions of Section 166 of the Companies Act, 2013 and as a matter of corporate governance, the directors of the Company have the following duties: –
- A director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of the environment.
- A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
- A director of a company shall disclose any situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
- A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.
- A director of a company shall not assign his office and any assignment so made shall be void.
In addition to the above duties an Independent Director shall be subject to following professional conduct:
- Independent Director shall clear the Online Proficiency Self-Assessment through the Independent Director’s Databank platform unless exempted by the Act.
- Registered on the databank of Independent directors maintained by Indian Institute of Corporate Affairs (IICA).
- Uphold ethical standards of integrity and probity;
- Act objectively and constructively while exercising his duties;
- Exercise his responsibilities in a bona fide manner in the interest of the company;
- Devote sufficient time and attention to his professional obligations for informed and balance decision making;
- Not allow any extraneous considerations that will vitiate his exercise of objective independent judgment in the paramount interest of the company as a whole, while concurring in or dissenting from the collective judgment of the Board in its decision making;
- Refrain from any action that would lead to loss of his independence;
- Where circumstances arise, which make an independent director lose his independence, the independent director must immediately inform the Board accordingly;
- Assist the company in implementing the best corporate governance practices.
Minimum Information to be placed before the Board
Pursuant to RBI Master Direction โ Reserve Bank of India (Non-Banking Financial Company โ Scale Based Regulation) Directions, 2023, the disclosures to be made by the Company to the directors shall include but not be limited to the following:
- all relevant information for taking informed decisions in respect of matters brought before the Board;
- The strategic and business plans and forecasts;
- The organizational structure of the Company and delegation of authority;
- Corporate and management controls and systems including procedures;
- Economic features and marketing environment;
- Information and updates as appropriate on the Companyโs products;
- Information and updates on major expenditure;
- Periodic reviews of performance of the Company; and
- Report periodically about implementation of strategic initiatives and plans; and
- Advise the director about the levels of authority delegated in matters placed before the Board.
Committees of the Board
In compliance with the applicable provisions of the Act, RBI guidelines on Corporate Governance and in order to meet business exigencies, the Company has constituted its Board committees and Management Committees.
Audit Committee
The Company has in place the Audit Committee in accordance with the provisions of Section 177 of the Companies Act, 2013 and Master Direction โ Reserve Bank of India (Non-Banking Financial Company โ Scale Based Regulation) Directions, 2023 issued by RBI. The Audit Committee shall have the powers and duties conferred upon it in compliance with RBI guidelines and the provisions of Section 177 of the Act.
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Secretary and Resources | The Company Secretary of the Company shall act as the Secretary to the Committee and shall keep appropriate records of all the meetings of the Committee with minutes of the proceedings and resolutions including recording the names of those present and in attendance. The Board will ensure that the Audit Committee will have funds available to enable it to take Independent Legal, Accounting and other advice when the Audit committee reasonably believes it necessary to do so. The Committee shall be provided with appropriate and timely training, both in the form of an induction programme for new members and on an on-going basis for all members. |
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Terms of reference | The Audit Committee shall act in accordance with the Terms of reference specified in writing by the Board which shall inter alia, include:
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Reporting | The Audit Committee shall report to the Board on how it has discharged its responsibilities, including:
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Performance evaluation | The Committee shall, on a regular basis, review its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval. The Committee shall evaluate its performance annually to assess their effectiveness. The Nomination and Remuneration Committee may facilitate such annual evaluation |
Nomination and Remuneration Committee
The Company has constituted a โNomination and Remuneration Committeeโ in compliance with the provisions of Section 178 of the Companies Act, 2013 and the same is in conformity with the RBI guidelines issued in this regard from time to time. The Nomination and Remuneration Committee shall have the powers and duties conferred upon it in compliance with the provisions of Section 178 of the Act, RBI guidelines and such other duties, obligations and powers as may be prescribed by the Board of the Company from time to time.
The Company has also formulated a Nomination and Remuneration Policy that defines its role.
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Secretary | The Company Secretary of the Company shall act as the Secretary to the Committee. |
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Terms of reference | The Nomination and Remuneration Committee shall act in accordance with the terms of reference specified in writing by the Board which shall inter alia, include
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Performance evaluation | Establish procedures for the Committee to oversee the evaluation of the performance of the Board and each Director and the Company Secretary, including an assessment of whether each Director has devoted sufficient time to their duties. The Committee shall evaluate its performance annually to assess their effectiveness. The Nomination and Remuneration Committee shall facilitate such annual evaluation. |
Risk Management Committee
The Company has in place a Risk Management Committee constituted in accordance with the RBI guidelines in this regard. The Risk Management Committee is responsible for managing, inter alia the integrated risk which includes liquidity risk, interest rate risk, currency risk and such other functions as may be assigned to it by the Board of the Company. Further, the Risk Management Committee shall ensure that progressive risk management system and a strategy followed by the Company are put in place.
The Company has formulated a Risk Management Policy that defines its role.
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Composition | The Risk Management Committee shall consist of a minimum of three directors including the founder/CEO. The Chairperson of the Company can be a member, but not chairperson of the committee, provided he has expertise in the risk domain. |
Secretary | The Company Secretary of the Company shall act as the Secretary to the Committee. |
Meetings and Quorum | The Committee shall on quarterly basis review and monitor the risk associated with business of the Company. The Chairperson for the meeting shall be an independent director and the valid quorum shall be not less than 2 comprising one Independent director and the founder and in her absence, an Investor director. |
Terms of reference | The Risk Management Committee shall act in accordance with the terms of reference specified in writing by the Board which shall inter alia, include:
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Performance evaluation | The Committee shall evaluate its performance annually to assess their effectiveness. The Nomination and Remuneration Committee shall facilitate such annual evaluation. |
IT Strategy Committee
The Company has in place the IT Strategy Committee constituted in accordance with the RBI guidelines. The IT Strategy Committeeโs primary goal is to approve IT Strategy and policy documents ensuring that the management has put an effective strategic planning process.
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Secretary | The Company Secretary of the Company shall act as the Secretary to the Committee. |
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Performance evaluation | The Committee shall evaluate its performance annually to assess their effectiveness. The Nomination and Remuneration Committee shall facilitate such annual evaluation. |
Finance Committee
The Company has in place the Finance Committee vested with the powers for smooth functioning of day to day activities and ease of operation.
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Composition | The Finance Committee shall consist of a minimum of Two Members. |
Secretary | The Company Secretary of the Company shall act as the Secretary to the Committee. |
Meetings and Quorum | The Committee shall meet as when necessary and the Quorum for the meeting is Two Directors |
Terms of reference | The Finance Committee shall act in accordance with the terms of reference specified in writing by the Board which shall inter alia, include:
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Corporate Social Responsibility (โCSRโ) Committee
The Company has in place the CSR Committee which recommends the CSR activities to the Board and monitors CSR activities of the Company in accordance with the provisions of Section 135 of Companies Act, 2013.
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Secretary | The Company Secretary of the Company shall act as the Secretary to the Committee. |
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Performance evaluation | The Committee shall evaluate its performance annually to assess their effectiveness. The Nomination and Remuneration Committee may facilitate such annual evaluation. |
Review Committee
The Company has constituted Review Committee, pursuant to the Master Direction on Treatment of Wilful Defaulters and Large Defaulters issued by the RBI on July 30, 2024 with a view to review & declare the details of Wilful Defaults of INR 25 lakhs and above, proposed by the Identification Committee of Wilful Default.
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Composition | The Committee shall consist of Managing Director/Chief Executive Officer as the chairperson and two Independent Directors or Non-Executive Directors as members to the committee. |
Meetings Frequency and Quorum | As and when required |
Terms of reference |
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Information Security Committee
The Company has in place the Information Security Committee constituted in accordance with the RBI guidelines. The IT Strategy Committeeโs primary goal is to determine whether IT processes are aligned with business requirements, implement and monitor the decisions and strategies undertaken by the IT Strategy Committee/Board of the Directors of the Company.
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Executive Risk Management Committee (ERMC)
The Company has in place the Executive Risk Management Committee (โERMCโ) constituted in accordance with the RBI guidelines. The ERMC is a management level committee that reports to the Risk Management Committee of the Board.
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Fraud Risk Management Committee (Special Committee of Executives for Monitoring and Follow-up of Fraud Cases)
The Company has constituted a Fraud Risk Management Committee, a special committee of executives for monitoring and follow-up of fraud cases pursuant to the RBI vide Master Directions on Fraud Risk Management in Non-Banking Financial Companies (NBFCs) dated July 15, 2024. In pursuant of the Master Direction, the Committee shall review all fraudulent cases reported by Internal Audit after investigation, oversee effectiveness of fraud risk management framework, and minimizing fraud incidents, etc.
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Composition | The Committee shall consist of minimum 3 members consisting of CEO, CRO and Internal Audit Head will constitute this Committee with the CEO as the chair of the Committee. In addition to the above, Head of Investigation would also be member of the Committee. Other invitees can include: CFO, Sales Head, Legal Head, Collections Head, Credit Head, Deputy CHRO, etc. |
Meetings Frequency and Quorum | Meeting Frequency: - Monthly Quorum: - Minimum 2 |
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Identification Committee
The Company has constituted Identification Committee, pursuant to the Master Direction on Treatment of Wilful Defaulters and Large Defaulters issued by the RBI on July 30, 2024. The Committee shall review all fraudulent cases reported by Internal Audit after investigation, oversee effectiveness of fraud risk management framework, and minimizing fraud incidents, etc.
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Composition | The Committee shall consist of senior officials, including an officer not more than one rank below the Managing Director/Chief Executive Officer as the chairperson and two senior officials not more than two ranks below the chairperson. |
Meetings Frequency and Quorum | As and when required |
Terms of reference |
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Separate Independent Directors Meetings
- The Independent Directors of the company shall hold at least one meeting in a Financial year, without the attendance of Non-Independent Directors and members of management;
- All the Independent directors of the company shall strive to be present at such meeting;
- The meeting shall:
- reviews the performance of non-independent directors and the Board as a whole;
- reviews the performance of the Chairperson of the company, considering the views of executive directors and non-executive directors;
- assesses the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
Fit & Proper Criteria
The Company has adopted a Policy on Fit & Proper Criteria of Directors. This policy defines an internal supervisory process of due diligence to determine the appropriateness of the persons for their appointment/continuing to hold appointment as Director on the Board of the Company. The Policy, in line with the RBI guidelines, also provides for obtaining a Fit & Proper declaration from the Director proposed to be appointed and annually from all the Directors on a continuing basis as on March 31.
The Company shall furnish to RBI a quarterly statement on change of directors, and a certificate from the Managing Director that fit and proper criteria in selection of the directors has been followed within 15 days of the close of the respective quarter. The statement to be submitted by the Company for the quarter ending March 31, shall be certified by the Statutory auditors.
Policies adopted by the company
The Company has framed and adopted policies as per regulatory requirements and as approved by the Board of the Company which forms part and parcel of the overall corporate governance framework of the Company.
Disclosure and transparency
- The Company shall put up to the Board of Directors, at regular intervals, as may be prescribed by the Board in this regard, the following:
- the progress made in putting in place a progressive risk management system and risk management policy and strategy followed by the Company;
- conformity with corporate governance standards viz., in composition of various committees, their role and functions, periodicity of the meetings and compliance with coverage and review functions, etc.
- The Company shall also disclose the following in their Annual Financial Statements, with effect from March 31, 2015:
- registration/ license/ authorisation, by whatever name called, obtained from other financial sector regulators;
- ratings assigned by credit rating agencies and migration of ratings during the year;
- penalties, if any, levied by any Regulator;
- information namely, area, country of operation and joint venture partners with regard to Joint ventures and overseas subsidiaries; and
- Asset-Liability profile, extent of financing of parent company products, NPAs and movement of NPAs, details of all off-balance sheet exposures, structured products issued by them as also securitization/ assignment transactions and other disclosures.
Vigil Mechanism
The Company has formulated and adopted a vigil mechanism / whistle blower policy to enable directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of Companyโs Code of Conduct. The vigil mechanism / whistle blower policy shall provide a mechanism for an individual to report violations without fear of victimisation. The policy is hosted on the website of the Company.
Appointment and rotation of Statutory Auditors /Audit Partner(s)
The appointment and rotation of Statutory Auditors shall be as per the Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) issued by RBI and as amended from time to time and Policy on Appointment of Statutory Auditors adopted by the Company and as may be amended from time to time.
Chief Compliance Officer (โCCOโ)
The Reserve Bank of India (RBI) through its circular regarding Scale Based Regulation (SBR)- A Revised Regulatory Framework for NBFCs dated October 22, 2021 and Compliance Function and Role of Chief Compliance Officer dated April 11, 2022 has mandated appointment of Chief Compliance Officer (โCCOโ) in NBFC-ML. The CCO is required to function independently with specified roles and responsibilities and to ensure highest standards of compliance.
The Board of Directors at its Meeting held on July 25, 2023, appointed Chief Compliance Officer of the Company. The roles and responsibilities of CCO are defined in the Compliance Policy.
Chief Risk Officer (โCROโ)
The Reserve Bank of India (RBI) pursuant to its Master Direction โ Reserve Bank of India (Non-Banking Financial Company โ Scale Based Regulation) Directions, 2023 issued dated October 19, 2023 has mandated appointment of Chief Risk Officer (โCROโ) for NBFCs with asset size of more than โน5,000 crore. The CRO is required to function independently so as to ensure highest standards of risk management.
The Company has not yet reached the asset size of more than โน5,000 crore; however, the Board of Directors at its Meeting held on May 03, 2024, appointed Chief Risk Officer of the Company. The roles and responsibilities of CRO are defined in the Risk Management Policy.
Review of Policy
The policy will be approved by the Board and hosted on the official website of the Company.
The Policy will be reviewed on an annual basis or as and when deemed necessary by the Board in the context of changing regulation and guidelines and emerging best practices with a view to enhancing the Companyโs governance.