Sub: Appointment as Independent Director
We are pleased to advise you that at the Annual General Meeting held on4th September, 2014, the shareholders have approved your appointment as an Independent Director of Tata Advanced Materials Ltd(the “Company”) with effect from4th September, 2014.We are eager to have you as an integral part of the growth of our Company.
We thank you for your confirmation to the Company that you meet the “independence” criteria as envisaged in Section 149(6) of the Companies Act, 2013 (“2013 Act”)
This letter is being issued to comply with the requirements of Schedule IV of the 2013 Act pertaining to the Code of Independent Directors
This letter sets out the broad terms of your appointment as an IndependentDirector, on the Board of the Company.
The terms of your appointment, as set out in this letter, are subject to the extant provisions of the (i) applicable laws, including 2013 Act and (ii) Articles of Association of the Company (“AOA”).
Your appointment will be for a period as determined not exceeding 5 years from the date of appointment (“Term”).The Company may disengage Independent Directors prior to completion of the Term subject to compliance of relevant provisions of the 2013 Act.
As an Independent Director you will not be liable to retire by rotation.
You may be requested to be a member / Chairman of any one or more Committees of the Board which may be constituted from time to time.
2. Role, duties and responsibilities
A. As member of the Board you along with the other Directors will be collectively responsible for meeting the objectives of the Board which include:
· Requirements under the Companies Act, 2013,
· Accountability under the Director’s Responsibility Statement.
B. You shall abideby the ‘Code For Independent Directors’ as outlined in Schedule IV to section 149(8) of the 2013 Act, and duties of directors as provided in the 2013 Act (including Section 166).For your ready reference, the relevant provisions have been extracted and attached to this letter as Annexure A.
3. Time Commitment
Considering the nature of the role of a director, it is difficult for a company to lay down specific parameters on time commitment. You agree to devote such time as is prudent and necessary for the proper performance of your role, duties and responsibilities as an Independent Director.
As an Independent Director you shall be paid sitting fees for attending the meetings of the Board and the Committees of which you are a member. The sitting fees for attending each meeting of the Board and its Committees would be as determined by the Board from time to time.
In addition to the sitting fees, commission that may be determined by the Board may also be payable to you. In determining the amount of this commission, the Board supported by the Nomination and Remuneration Committee may consider performance of the Company and your performance as evaluated by the Board.
Further, the Company may pay or reimburse to you such expenditure, as may have been incurred by you while performing your role as an Independent Director of the Company. This could include reimbursement of expenditure incurred by you for accommodation, travel and any out of pocket expenses for attending Board/ Committee meetings, General Meetings, court convened meetings, meetings with shareholders/ creditors/ management, site visits, induction and training (organized by the Company for Directors) and in obtaining, subject to the expense being reasonable, professional advice from independent advisors in the furtherance of your duties as an Independent Director.
The Company will take an appropriate Directors’ and Officers’ Liability Insurance policy and pay the premiums for the same. It is intended to maintain such insurance cover for the Term of your appointment, subject to the terms of such policy in force from time to time. A copy of the policy document willbe supplied on request.
6. Tata Code of Conduct
As an Independent Director of the Company, you agree to comply with the Tata Code of Conduct for Non-Executive Directors (NEDs). For your reference, the Code of Conduct for Non-Executive Directors as adopted by the Board is provided in Annexure B.
Unless specifically authorised by the Company, you shall not disclose company and business information to constituencies such as the media, the financial community, employees, shareholders, agents, franchisees, dealers, distributors and importers.
Your obligation of confidentiality shall survive cessation of your directorship with the Company.
We would also like to draw your attention to the applicability of both, Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 and the Tata Code of Conduct on Prevention of Insider Trading, prohibiting disclosure or use of unpublished price sensitive information.
Additionally, you shall not participate in any business activity which might impede the application of your independent judgment in the best interest of the Company.
All Directors are required to sign a confirmation of acceptance of the Tata Code of Conduct for NEDs as adopted by the Board on annual basis.
7. Trainingand Development
The Company may, if required, conduct formal training program for its Independent Directors which may include any or all of the following:
· Board roles and responsibilities, whilst seeking to build working relationship among the Board members,
· Company’s vision, strategic direction, core values, ethics and corporate governance practices,
· Familiarization with financial matters, management team and business operations,
· Meetings with stakeholders, visits to business locations and meetings with senior and middle management.
The Company may, as may be required, support Directors to continually update their skills and knowledge and improve their familiarity with the company and its business. The Company will fund/arrange for training on all matters which are common to the whole Board.
8. Performance Appraisal/ Evaluation Process
As a member of the Board, your performance as well as the performance of the entire Board and its Committees will be evaluated annually. Evaluation of each director shall be done by all the other directors. The criteria for evaluation shall be disclosed in the Company’s Annual Report. However, the actual evaluation process shall remain confidential and shall be a constructive mechanism to improve the effectiveness of the Board / Committee.
9. Disclosures, other directorships and business interests
During the Term, you agree to promptly notify the Company of any change in your directorships, and provide such other disclosures and information as may be required under the applicable laws. You also agree that upon becoming aware of any potential conflict of interest with your position as Independent Director of the Company, you shall promptly disclose the same to theChairman/ Company Secretary. By signing this letter, you hereby confirm that as on date of this letter, you have no such conflict of interest issues with your existing directorships.
During your Term, you agree to promptly provide a declaration under Section 149(7) of the 2013 Act, upon any change in circumstances which may affect your status as an Independent Director.
10. Changes of personal details
During the Term, you shall promptly intimate the Company Secretary and the Registrar of Companies in the prescribed manner,of any change in address or other contact and personal details provided to the Company.
You may resign from the directorship of the Company by giving a notice in writing to the Company stating the reasons for resignation. The resignation shall take effect from the date on which the notice is received by the Company or the date, if any, specified by you in the notice, whichever is later.
Your directorship on the Board of the Company shall cease in accordance with law. The Company may disengage Independent Directors prior to completion of Term (subject to compliance of relevant provisions of the 2013 Act) upon
· Violation of any provision of the Tata Code of Conduct as applicable to Non-Executive Directors,
· Upon the director failing to meet the criteria for independence as envisaged in Section 149(6) of the 2013 Act
This lettershall be disclosed on the website of the Company.
13. Acceptance of Appointment
Please confirm your acceptance of the above terms by signing and returning the enclosed duplicate copy of this letter.
We thank you for your continued support and commitment to the Company.
For Tata Advanced Materials Ltd.,
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.
[See section 149(8)]
CODE FOR 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.
I. Guidelines of professional conduct:
An independent director shall:
(1) Uphold ethical standards of integrity and probity;
(2) Act objectively and constructively while exercising his duties;
(3) Exercise his responsibilities in a bona fide manner in the interest of thecompany;
(4) Devote sufficient time and attention to his professional obligations for informed and balanced decision making;
(5) 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;
(6) 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;
(7) Refrain from any action that would lead to loss of his independence;
(8) Where circumstances arise which make an independent director lose his independence, the independent director must immediately inform the Board accordingly;
(9) Assist the company in implementing the best corporate governance practices.
II. Role and functions:
The independent directors shall:
(1) 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;
(2) Bring an objective view in the evaluation of the performance of board and management;
(3) Scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance;
(4) satisfy themselves on the integrity of financial information and that financial controls and the systems of risk management are robust and defensible;
(5) Safeguard the interests of all stakeholders, particularly the minority shareholders;
(6) Balance the conflicting interest of the stakeholders;
(7) 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;
(8) Moderate and arbitrate in the interest of the company as a whole, in situations of conflict between management and shareholder’s interest.
III. Duties :
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 behavior, 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.
IV. Manner of appointment:
(1) 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.
(2) The appointment of independent director(s) of the company shall be approved at the meeting of the shareholders.
(3) 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 fulfils the conditions specified in the Act and the rules made thereunder and that the proposed director is independent of the management.
(4) The appointment of independent directors shall be formalised through a letter of appointment, which shall set out :
(a) The term of appointment;
(b) The expectation of the Board from the appointed director; the Boardlevel committee(s) in which the director is expected to serve and its tasks;
(c) The fiduciary duties that come with such an appointment along with accompanying liabilities;
(d) Provision for Directors and Officers (D and O) insurance, if any;
(e) The Code of Business Ethics that the company expects its directors and employees to follow;
(f) The list of actions that a director should not do while functioning as such in the company; and
(g) The remuneration, mentioning periodic fees, reimbursement of expenses for participation in the Boards and other meetings and profit related commission, if any.
(5) 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.
(6) The terms and conditions of appointment of independent directors shall also be posted on the company’s website.
The reappointment of independent director shall be on the basis of report of performance evaluation.
VI. Resignation or removal:
(1) 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.
(2) 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.
(3) Where the company fulfils 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.
VII. Separate meetings:
(1) The independent directors of the company shall hold at least one meeting in a year, without the attendance of nonindependent directors and members of management;
(2) All the independent directors of the company shall strive to be present at such meeting;
(3) The meeting shall:
(a) Review the performance of nonindependent directors and the Board as a whole;
(b) Review the performance of the Chairperson of the company, taking into account the views of executive directors and nonexecutive directors;
(c) 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.
VIII. Evaluation mechanism:
(1) The performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.
(2) 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.