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N&R Policy

NOMINATION AND REMUNERATION POLICY OF CANARA ROBECO ASSET MANAGEMENT CO. LTD

Background:


The Nomination and Remuneration Committee (“the Committee”) is constituted by the Board of Directors (“Board”) of Canara Robeco Asset Management Company Limited (“the Company”) in their meeting held on 25th April, 2014 in compliance with Section 178 of the Companies Act, 2013 (“the Act”) read along with the applicable rules thereto and Articles 170A (3) and 188 of the Articles of Association of the Company (“AoA”). The present Nomination and Remuneration Policy (“Policy”) is in compliance with Sections 178(2) and 178(3) of the Act read along with the applicable rules thereto and the AoA.


Constituents of the Policy:


This Policy shall comprise of the following two broader constituents:

A. NOMINATION POLICY: The Nomination Policy is aimed at:

i. Laying down of criteria by the Committee which shall form the basis for enabling the Committee to identify persons who are qualified to become directors of the Company (“Director”). The appointment and removal of the Directors so identified shall be recommended by theCommittee to the Board.

ii. Laying down of criteria by the Committee which shall form the basis for enabling the Committee to identify persons who may be appointed in Senior Management (as defined hereinafter) of the Company. The appointment and removal of the Senior Management personnel soidentified shall be recommended by the Committee to the Board. The Board shall take note of the appointment (s) or removal(s) of such Senior Management personnel by means of a resolution passed at meetings of the Board in accordance with Rule 8(3) of Companies (Meetings of Board and its Powers) Rules, 2014 (“Board Rules”).

iii. Formulation of criteria by the Committee for determining qualifications, positive attributes and independence of a Director.

iv. Carrying out evaluation of every Director’s performance by the Committee.

For removal of doubt, it is absolutely made clear that the Committee shall have no role to play in the appointment and removal of Key Managerial Personnel (“KMP”) (as defined hereinafter). The power to appoint or remove KMP shall be exercised by the Board only by means of resolutions passed at the meetings of the Board in accordance with the requirements of the Act and the AoA.


B. REMUNERATION POLICY: The Remuneration Policy shall be recommended by the Committee to the Board and shall relate to the remuneration for the Directors, KMPs, Senior Management and other employees.



Definitions:


a. Key Managerial Personnel: Key Managerial Personnel means—

i. Chief Executive Officer or the managing director or the manager;

ii. Company Secretary,

iii. whole-time director;

iv. Chief Financial Officer; and

v. such other officer as may be prescribed.


b. Joint Venture Committee (“JV Committee”): The J V Committee means the Committee of Shareholders/ Joint Venture Partners. The said Committee shall be comprising of 1 (one) Robeco Nominee Director (as defined in the AoA) and 1 (one) Canara Bank Nominee Director (as defined in the AoA).


c. Management Team: Management team means the Chief Operating Officer / Chief Financial Officer (“COO / CFO”), Chief Investment Officer (“CIO”) and a Chief Commercial Officer (“CCO”) collectively with the Chief Executive Officer (“CEO”)/ Manager.


d. Senior Management: Senior Management means personnel of the company who are members of its core management team excluding the Board and KMP. This Senior Management would include functional heads i.e. COO, CIO, CCO/Head- Sales and Marketing, or Head- Equities, Head- Fixed income, and Head-Offshore Investment and Business development.



PART I - CONSTITUTION OF THE COMMITTEE

Membership:

a. The Committee shall consist of a minimum 4 non-executive directors. Not less than one half member of the Committee shall be independent directors.

b. minimum three (3) members shall constitute a quorum for the Committee meeting which will include 1 Robeco Nominee Director, 1 Canara Nominee Director and at least 1 independent director. In the event the Sponsors (as defined in the AoA) agree to the Robeco Nominee Director and/or the Canara Nominee Director not being present for the purposes of constituting the quorum of the Committee meeting, then the quorum for the Committee meeting would be a minimum of two (2) members.

c. The Policy shall be disclosed in the Board’s report.

d. Term of the Committee shall be continued unless terminated by the Board.

e. The chairman of the Committee shall be independent directors as decided by the Board.

f. The chairman of the Committee, or in his absence, any other member of the Committee authorized by him, shall be permitted to attend the Company’s general meetings.


Committee Members’ Interests:

a. A member of the Committee is not entitled to be present when his or her own remuneration is discussed at a meeting or when his or her performance is being evaluated.

b. The Committee may invite such executives, as it considers appropriate, to be present at the meetings of the Committee.


Secretary:

a. The company secretary of the Company shall act as secretary of the Committee.


Frequency of Meetings:

a. The meeting of the Committee shall be held at such regular intervals as may be required.


Minutes of Committee Meeting:

a. Proceedings of all meetings of the Committee must be minuted and signed by the chairman of the Committee at the subsequent meeting. Minutes of the Committee meetings will be tabled at the subsequent Board and Committee meeting.


PART II - PROVISIONS FOR DIRECTORS

Appointment:

i. The Committee shall, taking into consideration the provision set out under Articles 138(1) and 138(2) of the AoA and any other relevant articles of the AoA, identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Directors, recommend to the Board his / her appointment.

ii. The Committee shall review the qualifications, adequacy and relevance of experience positive attributes and independence of a director pursuant to the requirements of the Act and all other applicable laws at the time of appointment/ re-appointment.

iii. An independent director shall hold office for a term upto 5 consecutive years on the Board of the Company and will be eligible for re-appointment on passing of a special resolution by the Company and disclosure of such appointment in the Board’s report.

iv. No independent director shall hold office for more than two consecutive terms, but such independent director shall be eligible for appointment after expiry of three years of ceasing to become an independent director. Provided that an independent director shall not, during the said period of three years, be appointed in or be associated with the Company in any other capacity, either directly or indirectly.


Evaluation of performance of Directors of the Company:

i. The Committee shall carry out periodical evaluation of performance of every director. Such an evaluation shall be carried out on yearly basis. The evaluation shall be done on the basis of the following criteria i.e., whether Directors:

a. act objectively and constructively while exercising their duties;

b. exercise their responsibilities in a bona fide manner in the interest of the Company;

c. devote sufficient time and attention to their professional obligations for informed and balanced decision making;

d. do not abuse their 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;

e. refrain from any action that would lead to loss of his independence;

f. inform the Board immediately when they lose their independence;

g. assist the Company in implementing the best corporate governance practices;

h. strive to attend all meetings of the Board and the committees of the Board;

i. participate constructively and actively in the committees of the Board in which they are chairpersons or members;

j. strive to attend the general meetings of the Company;

k. keep themselves well informed about the company and the external environment in which it operates;

l. do not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board;

m. moderate and arbitrate in the interest of the Company as a whole, in situations of conflict between management and shareholder’s interest;

n. abide by Company’s Memorandum of Association and AoA, Company’s policies and procedures including code of conduct, insider trading guidelines etc. ;

o. Any other criteria reasonably deemed fit by the independent directors of the Committee from time to time.


Removal:

i. Due to reasons for any disqualification mentioned in the Act rules made thereunder or under any articles of the AoA or other applicable act, rules and regulations, the Committee may recommend, to the Board with reasons recorded in writing, removal of a director subject to the provisions and compliance of the said act, rules, regulations and the AoA.


PART III - PROVISIONS FOR SENIOR MANGEMENT PERSONNEL

Appointment:

i. The Committee shall identify and ascertain the integrity, qualification, expertise and relevant / adequate experience of person who may be appointed as Senior Management. Robeco (as defined in the AoA) would have the right to nominate the COO, CIO and CCO who would be approved by the JV Committee prior to proposing their names to the Committee. Whereas, the Management Team shall propose persons who may be appointed as Senior Management (other than COO, CIO and CCO) to the Committee. The Committee would evaluate such Senior Management personnel before recommending details of the candidates to the Board.

ii. The Management Team is authorised to release offer letter to the candidate based on their assessment. However, the said offer letter shall have explicit clause to that effect that the offer is subject to the Committee recommending the details of the candidates to the Board for his/her appointment in accordance with the provisions of the AoA.

iii. The Board will take note of the appointment(s) of Senior Management recommended by the Committee.


Removal:

i. Due to any disqualification mentioned in the Act rules made there under or under any other applicable act, rules and regulations, including the SEBI (Mutual Funds) Regulations, 1996 as amended from time to time, the Committee may recommend, to the Board with reasons recorded in writing, removal of a Senior Management subject to the provisions and compliance of the said act, rules and regulations.

ii. Replacement of such Senior Management who are removed, if required, may be undertaken in accordance with this Policy and other applicable laws.


Retirement:

i. The Senior Management personnel shall retire as per the applicable provisions of the Act and the prevailing policy of the Company. The Board will have the discretion to retain the Senior Management personnel in the same position / remuneration or otherwise even after attaining the retirement age, for the benefit of the Company.


Insurance:

i. Where any insurance is taken by the Company on behalf of its whole-time Director, KMPs any other employees for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel. Provided that if such person is proved to be guilty, the premium paid on such insurance shall be treated as part of the remuneration.


PART IV - REMUNERATION POLICY

The Remuneration Policy applies to the Company’s Directors, KMPs, Senior Management and all other employees of the Company.

The disclosure of remuneration and limits, if any shall be governed by the provisions of the Act wherever required under the Company law or any rules made thereunder.

Wherever applicable under the Act or any rules made thereunder, the remuneration / compensation / commission etc. of Directors/KMPs/SMPs/employees shall be subject to the approval of the Committee and/or prior/post approval of the shareholders of the Company and/ or and/or the Central Government.

The Committee shall ensure that level and composition of remuneration is reasonable and sufficient, relationship of remuneration to performance is clear and meets appropriate performance benchmarks. Further, it shall ensure that the remuneration to Directors, KMPs 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.


(A) Directors

i. The remuneration / compensation / commission etc. to the whole-time director/managing director shall be determined by the J V Committee and recommended to the Committee. Prior to recommending to the Board, the Committee shall ensure that the level and composition of the remuneration prescribed is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully. The remuneration / compensation / commission etc. shall be subject to the prior/post approval of the shareholders of the Company and Central Government, wherever the same is required under the Act or any rules made there under. Such remuneration/ compensation/ commission, etc. or any increments thereof shall be within the statutory limits specified under the Act, rules or any schedule thereto.

ii. The whole-time director /managing director shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee.

iii. If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its whole-time director/ managing director in accordance with the provisions of Schedule V of the Act and if it is not able to comply with such provisions, with the previous approval of the Central Government.

iv. If any whole-time director/ managing director draws or receives, by way of remuneration from the Company any such sums in excess of the limits prescribed under the Act or without the prior sanction of the Central Government, where required, he / she shall refund such sums to the Company and until such sum is refunded, hold it in trust for the Company. The Company shall not waive recovery of such sum refundable to it unless permitted by the Central Government.

v. The independent director may receive remuneration by way of fees for attending meetings of the Board or the Committee thereof. The sitting fees for attending the Board meeting shall be INR 40,000/- and for attending the Committee meeting shall be INR 25,000/- for the present. Any increase in the sitting fees shall be proposed by JV Committee to the Committee for onwards recommendation to the Board for approval of such increase.

vi. The independent directors shall be entitled for the expenses on travel, accommodation & local transport for attending the above meetings.


(B) OTHER EMPLOYEES AND SENIOR MANAGEMENT:

BROAD PRINCIPLES:

Pursuant to Article 250 of the AoA, the HR framework has been approved by the Board in their meeting held on December 11, 2013. In the said HR framework the broad principles of remuneration are provided. Extract out of duly approved HR framework for clause relating to broad principles of remuneration is annexed as annexure A to this policy.

While determining the remuneration by the Management Team pursuant to provisions provided under the AoA, the Management Team shall follow the ‘Broad Principles’ of remuneration set out in the above HR framework.


Approval and limits of remuneration applicable to a manager:

The remuneration / compensation / commission etc. payable to the manager shall be subject to the prior/post approval of the shareholders of the Company and, if required, approved by the Committee and/or the Central Government, in accordance with the requirements under the Company law or any rules made there under. Remuneration/ compensation/ commission, etc. or any increments thereof shall be within the statutory limits specified under the Act, rules or any schedule thereto.

The costs borne by the company towards Manager’s remuneration shall be evaluated by the Committee in accordance with the statutory limits specified under the Act, rules or any schedule thereto.

If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration in accordance with the provisions of Schedule V of the Act and if it is not able to comply with such provisions, with the previous approval of the Central Government.


Fixing of Remuneration of KMPs:

The remuneration / compensation / commission etc. of KMPs (other than the CEO/ Manager) at the time of appointment will be evaluated by the Committee in accordance with this Policy and will recommended the same to the Board for further action.


REPORTING OF AGRREGATE FIXED REMUNERATION:

Based on the recommendations provided by the Management Team, the aggregate remuneration payable to all the employees for every succeeding year shall be evaluated by the Committee in accordance with this Policy and such details will be recommended by the Committee to the Board.

Within the overall remuneration recommended by the Committee to the Board, the Management Team, pursuant to and in accordance with the powers provided under the AoA, shall have the discretion to decide and pay the remuneration to employees on case to case basis.


REPORTING OF AGREEGATE VARIABLE COMPONENT:

Based on the recommendation provided by the JV Committee, the aggregate variable component payable to all the employees including KMPs and SMPs based on the Company performance as reflected in Company score card for the preceding year shall be evaluated by the Committee in accordance with this Policy, and such details will be recommended by the Committee to the Board.

Within the overall variable pool recommended by the Committee to the Board, the Management Team shall have discretion to decide and pay the variable component on case to case basis.


Performance Management System:

All employees who have passed the probation period are entitled to participate in the performance management system:

1. The purpose of the annual performance management system would be creation and sustenance of a culture that recognizes and rewards high performance as well as behaviours which are consistent with organization culture and values.

2. The process would comprise discussions for alignment of individual goals with corporate objectives and will end with individual performance discussions and ratings.

3. The performance ratings so obtained would serve as the primary input for all variable pay and merit pay increases to be extended to the employees.


REVIEW:

The Policy shall be subject to annual review or change in applicable law whichever is earlier.


ANNEXURE A - BROAD PRINCIPLES OF REMUNERATION

1. The Compensation of an employee shall accrue from the date of commencement of his service in the AMC and shall cease to accrue from the date of cessation of his service.

2. The AMC will follow a competitive Compensation philosophy vis-a-vis the market to attract and retain talent.

3. The Annual compensation will comprise Fixed Pay and Variable Pay. the relative percentages of each will be decided and altered by the Management from time to time for various employee levels/functions in the company.

4. Every employee (including those on probation) will receive an annual increment on the completion of each period of service of one year, subject to the employee performing satisfactorily. The merit-based increment will be subject to adjustments as per the discretionary powers of management and will be subject to a cap as per the maximum of the salary scale for the specific role.

5. The variable component of the Employee's compensation would be driven primarily by his/her performance, performance of his I her function or team- and overall company performance, which will derive from a consistent calculation system, which can be amended by management.

6. Payment of gratuity shall be made to an employee or his legal heirs or successors as the case may be, if he is eligible for it under the rules laid out.

7. The employees of the AMC would also accrue the benefits pertaining to the Employee Provident Fund as per the provisions of the same.

8. In addition to the above, the AMC may provide to its employees various secondary benefits in line with those offered by the industry (which may include but are not limited to provision of a Company Leased Vehicle, Loan /Interest subsidies, Insurance coverage, Medical support and Meal Coupons). The extent of benefits entitlement would be dependent upon the position held by the employee and upon discretionary decision of management.

9. The AMC may provide any other incentive/benefit in line with those offered in the industry.

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