Corporate Governance

The scope and function of the Audit Committee is in accordance with Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI Listing Regulations. Its terms of reference are as follows:

Powers of Audit Committee

The Audit Committee shall have powers, including the following:

• To investigate any activity within its terms of reference;
• To seek information from any employee;
• To obtain outside legal or other professional advice;
• To secure attendance of outsiders with relevant expertise, if it considers necessary; and
• Such other powers as may be prescribed under the Companies Act and SEBI Listing Regulations.

Role of Audit Committee

The role of the Audit Committee shall include the following:

• Oversight of financial reporting process and the disclosure of financial information relating to Eastman Auto & Power Limited (the “Company”) to ensure that the financial statements are correct, sufficient and credible;
• Recommendation for appointment, re-appointment, replacement, remuneration and terms of appointment of auditors of the Company and the fixation of the audit fee;
• Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
• Formulation of a policy on related party transactions, which shall include materiality of related party transactions;
• Reviewing, at least on a quarterly basis, the details of related party transactions entered into by the Company pursuant to each of the omnibus approvals given;
• Examining and reviewing, with the management, the annual financial statements and auditor's report thereon before submission to the Board for approval, with particular reference to:
  • Matters required to be included in the director’s responsibility statement to be included in the Board’s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013;
  • Changes, if any, in accounting policies and practices and reasons for the same;
  • Major accounting entries involving estimates based on the exercise of judgment by management;
  • Significant adjustments made in the financial statements arising out of audit findings;
  • Compliance with listing and other legal requirements relating to financial statements;
  • Disclosure of any related party transactions; and
  • Modified opinion(s) in the draft audit report.
• Reviewing, with the management, the quarterly, half-yearly and annual financial statements before submission to the Board for approval;
• Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the Offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the board of directors of the Company (the “Board” or “Board of Directors”) to take up steps in this matter;
• Reviewing and monitoring the auditor’s independence and performance, and effectiveness of audit process;
• Approval of any subsequent modification of transactions of the Company with related parties and omnibus approval for related party transactions proposed to be entered into by the Company, subject to the conditions as may be prescribed;
  Explanation: The term "related party transactions" shall have the same meaning as provided in Clause 2(zc) of the SEBI Listing Regulations and/or the applicable Accounting Standards and/or the Companies Act, 2013.
• Scrutiny of inter-corporate loans and investments;
• Valuation of undertakings or assets of the Company, wherever it is necessary;
• Evaluation of internal financial controls and risk management systems;
• Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
• Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;
• Discussion with internal auditors of any significant findings and follow up there on;
• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;
• Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
• Recommending to the board of directors the appointment and removal of the external auditor, fixation of audit fees and approval for payment for any other services;
• Looking into the reasons for substantial defaults in the payment to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
• Reviewing the functioning of the whistle blower mechanism;
• Monitoring the end use of funds raised through public offers and related matters;
• Overseeing the vigil mechanism established by the Company, with the chairman of the Audit Committee directly hearing grievances of victimization of employees and directors, who used vigil mechanism to report genuine concerns in appropriate and exceptional cases;
• Approval of appointment of chief financial officer (i.e., the whole-time finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;
• Reviewing the utilization of loans and/or advances from/investment by the holding company in the subsidiary exceeding ₹ 1,000,000,000 or 10% of the asset size of the subsidiary, whichever is lower including existing loans/ advances/ investments existing as on the date of coming into force of this provision;
• Consider and comment on rationale, cost-benefits and impact of schemes involving merger, demerger, amalgamation etc., on the Company and its shareholders; and
• Carrying out any other functions required to be carried out by the Audit Committee as contained in the SEBI Listing Regulations or any other applicable law, as and when amended from time to time.

The Audit Committee shall mandatorily review the following information:

• Management discussion and analysis of financial condition and results of operations;
• Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;
• Management letters / letters of internal control weaknesses issued by the statutory auditors;
• Internal audit reports relating to internal control weaknesses;
• The appointment, removal and terms of remuneration of the chief internal auditor;
• Statement of deviations in terms of the SEBI Listing Regulations:
  • Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) where the Equity Shares are proposed to be listed in terms of the SEBI Listing Regulations; and
  • Annual statement of funds utilised for purposes other than those stated in the offer document/prospectus/notice in terms of the SEBI Listing Regulations.
  • Review the financial statements, in particular, the investments made by any unlisted subsidiary.

The scope and function of the Corporate Social Responsibility Committee is in accordance with Section 135 of the Companies Act, 2013. Its terms of reference are as follows:

• Formulate and recommend to the Board, a “Corporate Social Responsibility Policy” which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013 and the rules made thereunder, as amended, monitor the implementation of the same from time to time, and make any revisions therein as and when decided by the Board.
• Identify corporate social responsibility policy partners and corporate social responsibility policy programmes.
• Review and recommend the amount of expenditure to be incurred on the activities referred to in clause (a)and the distribution of the same to various corporate social responsibility programs undertaken by the Company.
• Delegate responsibilities to the corporate social responsibility team and supervise proper execution of all delegated responsibilities.
• Review and monitor the implementation of corporate social responsibility programmes and issuing necessary directions as required for proper implementation and timely completion of corporate social responsibility programmes.
• Any other matter as the Corporate Social Responsibility Committee may deem appropriate after approval of the Board or as may be directed by the Board, from time to time; and
• Exercise such other powers as may be conferred upon the Corporate Social Responsibility Committee in terms of the provisions of Section 135 of the Companies Act.

The scope and function of the Nomination and Remuneration Committee is in accordance with Section 178 of the Companies Act, 2013, read with Regulation 19 of the SEBI Listing Regulations. Its terms of reference are as follows:

• Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board of directors of the Company (the “Board” or “Board of Directors”) a policy relating to the remuneration of the directors, key managerial personnel and other employees (“Remuneration Policy”); 
  
  The Nomination and Remuneration Committee, while formulating the above policy, should ensure that:
  • The level and composition of remuneration be reasonable and sufficient to attract, retain and motivate directors of the quality required to run our Company successfully.
  • Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
  • Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short- and long-term performance objectives appropriate to the working of the Company and its goals.
• For every appointment of an independent director, evaluating the balance of skills, knowledge and experience on the Board and on the basis of such evaluation, preparing a description of the role and capabilities required of an independent director. The person recommended to the Board for appointment as an independent director shall have the capabilities identified in such description. For the purpose of identifying suitable candidates, the Nomination and Remuneration Committee may: (a) use the services of an external agencies, if required; (b) consider candidates from a wide range of backgrounds, having due regard to diversity; and (c) consider the time commitments of the candidates.
• Formulation of criteria for evaluation of independent directors and the Board;
• Devising a policy on Board diversity;
• Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal and carrying out evaluation of every director’s performance (including independent director);
• Deciding whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors
• Determining the Company’s policy on specific remuneration packages for executive directors including pension rights and any compensation payment, and determining remuneration packages of such directors;
• Recommending to the board, all remuneration, in whatever form, payable to senior management and other staff, as deemed necessary;
• Carrying out any other functions required to be carried out by the Nomination and Remuneration Committee as contained in the SEBI Listing Regulations or any other applicable law, as and when amended from time to time;
• Reviewing and approving the Company’s compensation strategy from time to time in the context of the then current Indian market in accordance with applicable laws;
• Perform such functions as are required to be performed by the compensation committee under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, if applicable;
• Frame suitable policies, procedures and systems to ensure that there is no violation of securities laws, as amended from time to time, including:
  • The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; and
  • The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 2003, by the trust, the Company and its employees, as applicable.

Perform such other activities as may be delegated by the Board or specified/ provided under the Companies Act, 2013 to the extent notified and effective, as amended or by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended or by any other applicable law or regulatory authority.

The scope and function of the Risk Management Committee is in accordance with Regulation 21 of the SEBI Listing Regulations. The Risk Management Committee shall be responsible for, among other things, the following:

• To formulate a detailed risk management policy which shall include:
  • Framework for identification of internal and external risks specifically faced by the Company, in particular including financial, operational, sectoral, sustainability (particularly, environmental, social and governance (ESG) related risks), information, cyber security risks or any other risk as may be determined by the committee;
  • Measures for risk mitigation including systems and processes for internal control of identified risks; and
  • Business continuity plan.
• To ensure that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company;
• To monitor and oversee implementation of the risk management policy, including evaluating the adequacy of risk management systems;
• To periodically review the risk management policy, at least once in two years, including by considering the changing industry dynamics and evolving complexity;
• To keep the Board informed about the nature and content of its discussions, recommendations and actions to be taken;
• The appointment, removal and terms of remuneration of the chief risk officer shall be subject to review by the Risk Management Committee;
• To seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise, if it considers necessary;
• To review the Company’s risk-reward performance to align with the Company’s overall policy objectives;
• Laying down risk assessment and minimization procedures and the procedures to inform Board of the same;
• Framing, implementing, reviewing and monitoring the risk management plan for the Company and such other functions, including cyber security, as may be delegated by the Board; and
• Performing such other activities as may be delegated by the Board and/or are statutorily prescribed under any law to be attended to by the Risk Management Committee or by any regulatory authority and performing such other functions as may be necessary or appropriate for the performance of its duties.

The scope and function of the Stakeholders’ Relationship Committee is in accordance with Regulation 20 of the SEBI Listing Regulations. Its terms of reference are as follows:

• Resolving the grievances of the security holders of the listed entity including complaints related to transfer of shares or debentures, including non-receipt of share or debenture certificates and review of cases for refusal of transfer / transmission of shares and debentures, non-receipt of annual report or balance sheet, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc. and assisting with quarterly reporting of such complaints;
• Review of measures taken for effective exercise of voting rights by shareholders;
• Investigating complaints relating to allotment of shares, approval of transfer or transmission of shares, debentures or any other securities;
• Giving effect to all transfer/transmission of shares and debentures, dematerialisation of shares and re-materialisation of shares, split and issue of duplicate/consolidated share certificates, compliance with all the requirements related to shares, debentures and other securities from time to time;
• Review of adherence to the service standards adopted by the listed entity in respect of various services being rendered by the registrar and share transfer agent of the Company and to recommend measures for overall improvement in the quality of investor services;
• Review of the various measures and initiatives taken by the listed entity for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the Company; and
• Carrying out such other functions as may be specified by the Board from time to time or specified/provided under the Companies Act or SEBI Listing Regulations, or by any other regulatory authority.