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Corporate Governance

THE TERMS AND CONDITIONS OF APPOINTMENT OF THE INDEPENDENT DIRECTORS OF THE COMPANY IN ACCORDANCE WITH THE REQUIREMENTS OF SCHEDULE IV TO THE COMPANIES ACT, 2013

Date : ________________

Name of Director

Address

Dear Sir/Madam,

We are pleased to inform you that upon the recommendation of the Nomination Committee,  the  Board  of  Directors  of the Company has  approved  your  appointment  as Non-Executive Independent Director of the Company with effect from _______ 20__. Your  appointment  is  subject  to  the approval of  shareholders  at  the ensuing  Annual General Meeting of the Company scheduled to be held on ___________20_.

This letter of appointment setting the terms  and conditions thereof is being issued to you, in terms of Clause IV (4) of Schedule IV to the said Act.

The  aforesaid  Schedule  IV  inter  alia  covers  the  guidelines  of  professional  conduct, roles, functions,  duties,etc.,  of  the  Independent  Directors.  Further,  Section  166  of the  Companies  Act,  2013  provides  for  the  Duties  of  Directors  of a  company.  The extracts of the relevant provisions of the Companies Act, 2013 along with the Schedule is enclosed as Annexure A for information.

Further, you shall also endeavor to provide the necessary disclosure under all applicable laws and adhere to the various Codes and Policies formulated and adopted by theCompany, from time to time.
Please note that for all the functions discharged by you, the Company will be paying sitting fees for meetings of the Board and its Committees as may be decided by the Board from time to time.
In addition to the remuneration as mentioned above, the Company shall reimburse you for all reasonable out-of pocket expenses necessarily incurred for attending the various meetings of the Board/Committee/Members and for discharging the fiduciary obligations towards the Company.

Kindly note that the Company shall purchase a Directors’ and Officers’ (D and O) liability insurance and it is intended to maintain such cover for the full term of your appointment.

By accepting this appointment, you are deemed to have confirmed that, any other position  you hold including your directorships in other organizations,  will not give rise to any ‘conflicts of interest’ in relation to your appointment as an Independent Director of the Company. Should you become aware of any conflict or potential conflict during the period of your appointment, you are expected to notify the same to the Board.

Looking forward to your continued support and commitment to the Company.

With kind regards,

For National Payments Corporation of India

 

Managing Director & CEO

Encl: Annexure A

AGREE AND ACCEPT

I have read and understood the terms of my appointment as an Independent Director of the Company and I hereby affirm my acceptance to the same.

____________________________

Name:

Place:

Date:

Annexure A
Extracts of the relevant provisions of the Companies Act, 2013
Section 166- Duties of Directors
  • Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of the company.
  • 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 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 not involve in a 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.
  • If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
CODE OF INDEPENDENT DIRECTORS

The Code is a guide to professional conduct for independent directors. Adherence to these standards by independent directors and fulfillment of their responsibilities in a professional and faithful manner will promote confidence of the investment community, particularly minority shareholders, regulators and companies in the institution of independent directors.

Guidelines of professional conduct:

An independent director shall:

  • 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 balanced 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;
  • not abuse his position to the detriment of the company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person;
  • 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.
Role and functions:

The independent directors shall:

  • help in bringing an independent judgment to bear on the Board’s deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct;
  • bring an objective view in the evaluation of the performance of board and management;
  • scrutinize the performance of management in meeting agreed goals and objectives and monitor the reporting of performance;
  • satisfy themselves on the integrity of financial information and that financial controls and the systems of risk management are robust and defensible;
  • safeguard the interests of all stakeholders, particularly the minority shareholders; balance the conflicting interest of the stakeholders;
  • balance the conflicting interest of the stakeholders;
  • determine appropriate levels of remuneration of executive directors, key managerial personnel and senior management and have a prime role in appointing and where necessary recommend removal of executive directors, key managerial personnel and senior management;
  • moderate and arbitrate in the interest of the company as a whole, in situations of conflict between management and shareholder’s interest.
Duties :

The independent directors shall

  • undertake appropriate induction and regularly update and refresh their skills, knowledge and familiarity with the company;
  • 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;
  • strive to attend all meetings of the Board of Directors and of the Board committees of which he is a member
  • participate constructively and actively in the committees of the Board in which they are chairpersons or members;
  • strive to attend the general meetings of the company;
  • 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;
  • keep themselves well informed about the company and the external environment in which it operates;
  • not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board;
  • 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;
  • 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;
  • report concerns about unethical behaviour, actual or suspected fraud or violation of the company’s code of conduct or ethics policy;
  • acting within his authority, assist in protecting the legitimate interests of the company, shareholders and its employees;
  • 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.
Manner of appointment:
  • Appointment process of independent directors shall be independent of the company management; while selecting independent directors the Board shall ensure that there is appropriate balance of skills, experience and knowledge in the Board so as to enable the Board to discharge its functions and duties effectively.
  • The appointment of independent director(s) of the company shall be approved at the meeting of the shareholders.
  • The explanatory statement attached to the notice of the meeting for approving the appointment of independent director shall include a statement that in the opinion of the Board, the independent director proposed to be appointed fulfills the conditions specified in the Act and the rules made thereunder and that the proposed director is independent of the management.
  • The appointment of independent directors shall be formalized through a letter of appointment, which shall set out:
    • the term of appointment;
    • the expectation of the Board from the appointed director; the Board-level committee(s) in which the director is expected to serve and its tasks;
    • the fiduciary duties that come with such an appointment along with accompanying liabilities;
    • provision for Directors and Officers (D and O) insurance, if any;
    • the Code of Business Ethics that the company expects its directors and employees to follow;
    • the list of actions that a director should not do while functioning as such in the company; and
    • the remuneration, mentioning periodic fees, reimbursement of expenses for participation in the Boards and other meetings and profit related commission, if any.
  • The terms and conditions of appointment of independent directors shall be open for inspection at the registered office of the company by any member during normal business hours.
  • The terms and conditions of appointment of independent directors shall also be posted on the company’s website.
Re-appointment:

The re-appointment of independent director shall be on the basis of report of performance evaluation.

Resignation or removal:
  • The resignation or removal of an independent director shall be in the same manner as is provided in sections 168 and 169 of the Act.
  • An independent director who resigns or is removed from the Board of the company shall be replaced by a new independent director within a period of not more than one hundred and eighty days from the date of such resignation or removal, as the case may be.
  • Where the company fulfills the requirement of independent directors in its Board even without filling the vacancy created by such resignation or removal, as the case may be, the requirement of replacement by a new independent director shall not apply.
Separate meetings:
  • The independent directors of the company shall hold at least one meeting in a 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:
    • review the performance of non-independent directors and the Board as a whole;
    • review the performance into account the views directors; of the Chairperson of the company, taking of executive directors and non-executive
    • assess 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.
Evaluation mechanism:
  • The performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.
  • On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent director.