Code of Conduct and Ethics for Directors and Senior Management
1. INTRODUCTION AND APPLICABILITY
This Code shall be applicable to each Director and member of the Senior Management of K.P.R. Mill Limited.
“Board” means the Board of Directors of the Company.
“Company” means K.P.R. Mill Limited, a public limited company incorporated under the laws of India and whose registered office is at No. 9, Gokul Buildings, 1st Floor, A.K.S. Nagar, Thadagam Road, Coimbatore 641 001, Tamil Nadu, India.
“Code” means this code of conduct and ethics applicable to each Director and Senior Management, as amended from time to time.
“Director” means each member of the Board of Directors of the Company, as may be appointed from time to time.
“Senior Management” mean employees of the Company, other than Directors, that are members of its core management team and includes all executive committee members of the Company, functional heads of the Company and such other employees of the Company as may be designated as members of the Senior Management for the purpose of this Code by the Chairman or Managing Director of the Company from time to time.
The Code shall have immediate effect.
(a) To set standards of ethical conduct and ensure these standards are upheld in day-today activities.
(b) To set standards of corporate governance by complying with all applicable laws, rules and regulations and all applicable policies and procedures adopted by the Company and to fulfill the responsibilities to stakeholders.
(c) To set and implement high standards of transparency, integrity, accountability and corporate social responsibility in all dealings.
5. THE CODE
Each Director and each member of Senior Management will always act in the best interests of the Company and in accordance with the authority conferred on him or her and shall, without prejudice to the foregoing, always act in accordance with this Code.
The Code seeks to set standards for, and regulate, the subjects described below.
- Prudent Conduct and Behaviour
- Transparency, Honesty and Integrity
- Fair Dealing
- Team Work and Spirit
- Conflict of Interest
- Compliance with Laws and Regulations
- Financial Record keeping and Reporting
- Other Directorships
- Insider Trading
- Gifts and Donations
- Protection of Company’s Assets.
- Periodical Review and Compliance with the Code.
The Company is committed to conducting its business prudently and in accordance with all applicable laws, rules and regulations and with the highest standards of corporate governance and business ethics both in letter and spirit. The Company is committed to being a good corporate citizen.
To uphold the reputation and values of the Company, the Directors and members of Senior Management must always abide by the policies and procedures that govern the conduct of the Company’s business. Each Director and each member of Senior Management will always act to uphold the Code. The Chief Financial Officer and the Company Secretary of the Company will act as facilitators and will be available to the Directors and members of Senior Management to answer questions and to help them comply with the Code.
Each Director and member of Senior Management will always act with the utmost care, skill and diligence and in accordance with the highest standards of personal and professional integrity, honesty and ethical conduct, while working on the Company’s premises, at Company sponsored business and social events, or at any other place where the Directors and Senior Management represent the Company. They shall at all times exercise their powers for the purposes they were conferred and for the benefit and prosperity of the Company and discharge their fiduciary duties in a fair and impartial manner.
In carrying out their duties and responsibilities, each Director and member of Senior Management shall endeavor to deal fairly and honestly with shareholders, creditors, lenders, customers, suppliers, employees and competitors. The Directors and Senior Management shall make their best efforts to contribute to an environment that encourages teamwork, builds confidence and empowers people through personal and professional growth. They shall attempt to build teams that grow together, complement each other and share their knowledge and skills with each other.
The Directors and Senior Management of the Company must avoid situations involving actual or potential conflicts of interest. They shall not engage in any business, relationship or activity, which may lead to a conflict of interest with the Company or affect their ability to perform their duties and responsibilities objectively and effectively.
A conflict of interest may arise where, directly or indirectly, and without limitation:
(a) an independent judgment of the Company’s interest cannot be exercised;
(b) an employee accepts any personal benefits or gifts or entertainment beyond what is considered to be customary in the industry in which the Company operates either by himself or herself or through his family as a result of his position in the Company from any person or company with which the Company has business dealings;
(c) an employee engages in any business activity that detracts from such employee’s ability to devote appropriate time and attention to his or her responsibilities to the Company;
(d) an employee has a significant interest in any supplier, customer or competitor of the Company;
(e) an employee of the Company is also an employee of any supplier, customer, business associate or competitor of the Company; and
(f) an employee is directly or indirectly concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into by or on behalf of the Company.
Prior written approval from the Board (with the relevant Director being disqualified from voting and excluded from the quorum) is required if any of the above arises or is anticipated to arise.
In carrying out their duties and responsibilities, the Directors and Senior Management shall comply with all applicable laws, rules and regulations.
If any Director or member of Senior Management knows of, or suspects, a violation of any applicable laws, rules or regulations or this Code, he or she must immediately report such violation to the Board or any designated person thereof. Such person should as far as possible provide the details of suspected violations with all known particulars relating to the issue. The Company recognizes that resolving such problems or concerns will advance the overall interests of the Company and will help to safeguard the Company’s assets, financial integrity and reputation.
The Directors and Senior Management shall take all necessary steps to ensure that no reprisal, threat, retribution or retaliation is made, or carried out, against any person who has in good faith reported a violation or a suspected violation of law or against any person who is assisting in any investigation or process in relation to such a violation.
The Company will take appropriate action against any Director and members of Senior Management whose actions are found to violate the Code or any other policy of the Company, after giving him or her a reasonable opportunity of being heard. Where laws, rules or regulations have been violated, the Company will cooperate fully with the appropriate authorities and regulators. Strict compliance with accounting principles is critical to ensure that all financial transactions are properly identified, analysed and recorded. The Directors and Senior Management shall make reasonable efforts to ensure that all business records and reports are accurate, complete and reliable.
No Director or member of Senior Management should serve on the board of directors of, or become a member of the senior management of, or have a significant influence over the management or policies of, a competitor of the Company.
The Directors and Senior Management shall maintain the confidentiality of information entrusted to them, including that of any customer, supplier or business associates of the Company to which the Company has a duty to maintain confidentiality, except when disclosure is authorised. The use of confidential information for his or her own advantage or profit is also prohibited. These obligations apply not only during the course of their employment with the Company but also for a period of one year following the termination of their employment with the Company.
The Directors and Senior Management shall comply with the provisions of the “Code of Internal Procedures and Conduct for Prevention of Insider Trading” as per Schedule B of regulation 9(1) of SEBI (Prohibition of Insider Trading) Regulations, 2015 as amended from time to time.
The Directors and Senior Management shall not:
(a) exploit directly or indirectly for their own personal gain, opportunities that are discovered through the use of the Company’s property (including intellectual property), information or position, without the specific prior written approval of the Board;
(b) divert directly or indirectly to his or her own advantage any business opportunity that the Company is pursuing or an opportunity that the Company may be pursing in the near future, without the specific prior written approval of the Board; and
(c) compete directly or indirectly with any business of the Company or with any business that the Company is considering, without the specific prior written approval of the Board. The Directors and Senior Management shall not receive or offer, directly or indirectly, any payments, gifts, donations, hospitality and comparable benefits which are intended or perceived to be intended to influence any business favors, without the specific prior written approval of the Board. The Directors and Senior Management shall endeavor to protect the Company’s assets at all times and shall use them for legitimate business purposes only. They shall not use the Company’s assets or manpower or company related information for illegal or unethical purposes or for their personal use unless approved by the Board in writing. Care should be taken to ensure that assets are not misappropriated, loaned to others, or sold or donated without appropriate authorization.
This Code may be amended, modified or varied by the Board as they deem necessary in the interests of the Company and subject to the provisions of applicable laws, regulations or guidelines.
The Directors and Senior Management shall in the last month of every financial year or whenever this Code is revised, acknowledge the understanding of the Code and execute an undertaking to continue complying with it. New Directors or members of Senior Management shall execute such an undertaking at the time of their induction.
6. DUTIES OF INDEPENDENT DIRECTORS:
Pursuant to the Regulation 17 (5)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Duties of Independent Directors as laid down in the Companies Act, 2013 are furnished here below.
The independent directors shall—
(1) undertake appropriate induction and regularly update and refresh their skills, knowledge and familiarity with the company;
(2) seek appropriate clarification or amplification of information and, where necessary, take and follow appropriate professional advice and opinion of outside experts at the expense of the company;
(3) strive to attend all meetings of the Board of Directors and of the Board committees of which he is a member;
(4) participate constructively and actively in the committees of the Board in which they are chairpersons or members;
(5) strive to attend the general meetings of the company;
(6) where they have concerns about the running of the company or a proposed action, ensure that these are addressed by the Board and, to the extent that they are not resolved, insist that their concerns are recorded in the minutes of the Board meeting;
(7) keep themselves well informed about the company and the external environment in which it operates;
(8) not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board;
(9) pay sufficient attention and ensure that adequate deliberations are held before approving related party transactions and assure themselves that the same are in the interest of the company;
(10) ascertain and ensure that the company has an adequate and functional vigil mechanism and to ensure that the interests of a person who uses such mechanism are not prejudicially affected on account of such use;
(11) report concerns about unethical behaviour, actual or suspected fraud or violation of the company’s code of conduct or ethics policy;
(12) acting within his authority, assist in protecting the legitimate interests of the company, shareholders and its employees;
(13) not disclose confidential information, including commercial secrets, technologies, advertising and sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly approved by the Board or required by law.
[See sub-regulation (1) of regulation 9]
Minimum Standards for Code of Conduct for Listed Companies to Regulate, Monitor and Report Trading by Designated Persons
- The compliance officer shall report to the board of directors and in particular, shall provide reports to the Chairman of the Audit Committee, if any, or to the Chairman of the board of directors at such frequency as may be stipulated by the board of directors, but not less than once in a year.
- All information shall be handled within the organisation on a need-to-know basis and no unpublished price sensitive information shall be communicated to any person except in furtherance of legitimate purposes, performance of duties or discharge of legal obligations. The code of conduct shall contain norms for appropriate Chinese Walls procedures, and processes for permitting any designated person to “cross the wall”.
- Designated Persons and immediate relatives of designated persons in the organisation shall be governed by an internal code of conduct governing dealing in securities.
- (i) Designated persons may execute trades subject to compliance with these regulations. Towards this end, a notional trading window shall be used as an instrument of monitoring trading by the designated persons. The trading window shall be closed when the compliance officer determines that a designated person or class of designated persons can reasonably be expected to have possession of unpublished price sensitive information. Such closure shall be imposed in relation to such securities to which such unpublished price sensitive information relates. Designated persons and their immediate relatives shall not trade in securities when the trading window is closed.
(ii). Trading restriction period shall be made applicable from the end of every quarter till 48 hours after the declaration of financial results. The gap between clearance of accounts by audit committee and board meeting should be as narrow as possible and preferably on the same day to avoid leakage of material information.
(iii). The trading window restrictions mentioned in sub-clause (1) shall not apply in respect of –
- transactions specified in clauses (i) to (iv) and (vi) of the proviso to sub-regulation (1) of regulation 4 and in respect of a pledge of shares for a bonafide purpose such as raising of funds, subject to pre-clearance by the compliance officer and compliance with the respective regulations made by the Board;
- transactions which are undertaken in accordance with respective regulations made by the Board such as acquisition by conversion of warrants or debentures, subscribing to rights issue, further public issue, preferential allotment or tendering of shares in a buy-back offer, open offer, delisting offer or transactions which are undertaken through such other mechanism as may be specified by the Board from time to time.
- The timing for re-opening of the trading window shall be determined by the compliance officer taking into account various factors including the unpublished price sensitive information in question becoming generally available and being capable of assimilation by the market, which in any event shall not be earlier than forty-eight hours after the information becomes generally available.
- When the trading window is open, trading by designated persons shall be subject to pre-clearance by the compliance officer, if the value of the proposed trades is above such thresholds as the board of directors may stipulate.
- Prior to approving any trades, the compliance officer shall be entitled to seek declarations to the effect that the applicant for pre-clearance is not in possession of any unpublished price sensitive information. He shall also have regard to whether any such declaration is reasonably capable of being rendered inaccurate.
- The code of conduct shall specify any reasonable timeframe, which in any event shall not be more than seven trading days, within which trades that have been pre-cleared have to be executed by the designated person, failing which fresh pre-clearance would be needed for the trades to be executed.
- The code of conduct shall specify the period, which in any event shall not be less than six months, within which a designated person who is permitted to trade shall not execute a contra trade. The compliance officer may be empowered to grant relaxation from strict application of such restriction for reasons to be recorded in writing provided that such relaxation does not violate these regulations. Should a contra trade be executed, inadvertently or otherwise, in violation of such a restriction, the profits from such trade shall be liable to be disgorged for remittance to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act.
Provided that this shall not be applicable for trades pursuant to exercise of stock options. Provided that this shall not be applicable for trades pursuant to exercise of stock options.
- The code of conduct shall stipulate such formats as the board of directors deems necessary for making applications for pre-clearance, reporting of trades executed, reporting of decisions not to trade after securing pre-clearance and for reporting level of holdings in securities at such intervals as may be determined as being necessary to monitor compliance with these regulations.
- Without prejudice to the power of the Board under the Act, the code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension, recovery, etc., that may be imposed, by the listed company required to formulate a code of conduct under sub-regulation (1) of regulation 9, for the contravention of the code of conduct. Any amount collected under this clause shall be remitted to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act.
- The code of conduct shall specify that in case it is observed by the listed company required to formulate a code of conduct under sub-regulation (1) of regulation 9, that there has been a violation of these regulations, it shall promptly inform the stock exchange(s) where the concerned securities are traded, in such form and such manner as may be specified by the Board from time to time.
- Designated persons shall be required to disclose names and Permanent Account Number or any other identifier authorized by law of the following persons to the company on an annual basis and as and when the information changes:
b.persons with whom such designated person(s) shares a material financial relationship
c.Phone, mobile and cell numbers which are used by them
In addition, the names of educational institutions from which designated persons have graduated and names of their past employers shall also be disclosed on a one-time basis.
Explanation – The term “material financial relationship” shall mean a relationship in which one person is a recipient of any kind of payment such as by way of a loan or gift from a designated person] during the immediately preceding twelve months, equivalent to at least 25% of the annual income of such designated person] but shall exclude relationships in which the payment is based on arm’s length transactions.
- Listed entities shall have a process for how and when people are brought ‘inside’ on sensitive transactions. Individuals should be made aware of the duties and responsibilities attached to the receipt of Inside Information, and the liability that attaches to misuse or unwarranted use of such information.