POLICY FOR DETERMINING MATERIAL SUBSIDIARIES

1. PREAMBLE

The Board of Directors (the “Board”) of Chadha Papers Limited (the “Company”), has adopted the below mentioned policy and procedures with regard to determination of Material Subsidiary(ies).

The policy is amended pursuant to Regulation 16(1)(c) and 46 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. This amended Policy will be applicable to the Company w.e.f. 30th May, 2016

2. PURPOSE AND SCOPE

For the purpose of this policy:-

“Holding Company” means, as per the provisions of Section 2(46) of the Companies Act, 2013, Holding Company, in relation to one or more companies’ means a company of which such companies are subsidiary companies. For the purpose of this Policy, Holding Company means “Chadha Papers Limited”

“Subsidiary Company” as per the provisions of Section 2(87) of the Companies Act, 2013 read with Rule 2(r) of Companies (Specification of Definitions Details)Rules, 2014, “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the Holding Company), means a company in which the Holding Company—

(i)Controls the composition of the Board of Directors; or

(ii)Exercises or controls more than one-half of the “total share capital” (i.e., aggregate of the :

(a)paid up equity share capital and

(b)convertible preference share capital) either at its own or together with one or more of its subsidiary companies.

“Board or Board of Directors” means Board of Directors of the Company including Executive, Non-Executive, Nominee and Independent Directors.

“Policy” means Policy on material subsidiaries.

“Material Subsidiary” means a Subsidiary in which the investment of the Company exceeds 20% of its consolidated net worth as per the audited balance sheet of the previous financial year or if the Subsidiary has generated 20% of the consolidated income of the Company during the previous financial year.

“Material Non-Listed Indian Subsidiary” means an unlisted subsidiary, incorporated in India, whose income or net worth (i.e. paid up capital and free reserves) exceeds 20% of the Consolidated income or net worth respectively, of the Listed Holding Company and its Subsidiaries in the immediately preceding accounting year. “

“Significant Transaction or Arrangement” shall mean any individual transaction or arrangement that exceeds or is likely to exceed 10% of the total revenues or total expenses or total assets or total liabilities, as the case may be, of the Material Unlisted Subsidiary for the immediately preceding accounting year.

“Audit Committee” means the Audit Committee as constituted by the Board of Directors of the Company under the provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013.

3. OBJECTIVE OF THE POLICY

The Objective of this policy is to determine the Material Subsidiaries of the Company and put in place a robust governance, framework and reporting requirements of Material Subsidiaries.

POLICY ON MATERIAL SUBSIDIARIES:

(a) The Holding Company shall appoint at least 1(one) Independent Director on the Board of Directors of a Material Non-Listed Indian Subsidiary Company.
(b) The Audit Committee of the Holding Company shall review the financial statements, in particular, the investments made by the Unlisted Subsidiary Company on quarterly basis.
(c) The minutes of the Board Meetings of the Unlisted Subsidiary Company shall be placed before the Board of the Holding Company on quarterly basis.
(d) The statement of all Significant Transactions and Arrangements entered into by the Material Unlisted Subsidiary Company shall be placed before the Board/Audit Committee of the Holding Company on quarterly basis.
(e) The Holding Company shall not dispose of Shares in its Material Subsidiary, which would reduce its shareholding (either on its own or together with other subsidiaries) to less than fifty percent (50%) or cease the exercise of control over the subsidiary without passing a Special Resolution in its General Meeting, except in such cases where divestment is under a scheme of arrangement, duly approved by a Court / Tribunal.
(f) Selling, disposing and leasing of Assets, amounting to more than twenty percent (20%) of the Assets of a Material Subsidiary on an aggregate basis during a financial year, shall require prior approval of shareholders of the Company by way of Special Resolution, unless the sale/disposal/ lease is made under a scheme of arrangement, duly approved by a Court / Tribunal.

4. DISCLOSURES

As prescribed under the revised Regulation 16(1)(c) and 46 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, this Policy shall be disclosed on the Company’s website and a web link thereto shall be provided in the Annual Report.

5. REVIEW OF THE POLICY

This Policy shall be subject to the review by Board of Directors, as may be deemed necessary and in accordance with any regulatory amendments.