CODE OF CONDUCT

1. Background

STEP is a non-profit organization registered under section 25 of the company Act 1956. SAMPURNA TRAINING AND ENTREPRENEURSHIP PROGRAMME, “STEP” is a social microfinance organization located at 222/18, MC Garden Road, Kolkata 700030, West Bengal. STEP was incorporated as a non-profit company in September 2010, and registered under section 25 of The Company Act 1956.

STEP provides micro credit services to the vulnerable family’s livings in slums of Kolkata and Howrah. Since the beginning STEP has incorporated various socio-economic services like business training, family counselling, health and social meetings vocational training etc.

Registration Status

• A Non-Profit Company registered in KOLKATA under section 25 of the company Act 1956.
• Corporate Identity Number CIN: U85190WB2010NPL153206
• STEP is registered under section 12AA and 80 G of the income tax act 1961.
• STEP received FCRA prior permission under the foreign contribution (regulation) Act, 2010.

Mission - To provide low income and disadvantage families with sustainable adopted and innovative financial, business development, access to employment and social services, building self-reliance and capacity to realize their wishes.

Vision - A flourishing society where vulnerable families are empowered to improve and strengthen their standard of living.

24. WE Shall follow company approved process to raise clients awareness of the options, choices, and responsibilities -vis financial products and services available. 25. WE Shall inform all new clients about the organization policies and procedures. 26. WE Shall inform clients about the existence and purpose of feedback mechanisms and how to access them.

COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE

Sampurna Training and Entrepreneurship Program (STEP) recognizes its role as a corporate citizen and endeavors to adopt the best practices and the highest standards of Corporate Governance through transparency in business ethics, accountability to its customers, government and others. The Company's activities are carried out in accordance with good corporate practices and the Company is constantly striving to better them and adopt the best practices.

In pursuing its Mission of “To provide low income and disadvantage families with sustainable adopted and innovative financial, business development, access to employment and social services, building self reliance and capacity to realize their wishes”, STEP has been balancing its dual objectives of “social” and financial goals, since its inception.

BOARD OF DIRECTORS

The Board of Directors along with its Committees shall provide leadership and guidance to the Company’s management and direct, supervise and control the performance of the Company.

As per the Company’s Articles of Association, the Board’s strength is required to be a minimum of two directors and a maximum of fifteen directors and none of the directors are liable to retire by rotation. The Board shall meet a minimum of four (4) times in a year, at least once in each quarter [in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board].

The Board has a vital role to play in the matters relating to policy formulation, implementation and strategic issues which are crucial for the long-term development of the organization.

In Compliance with Section 165 of the Companies Act, 2013 (‘the Act’), a director shall not hold the office of a director in more than 20 companies. Provided that the maximum number of public companies in which a person can be appointed as a director shall not exceed 10.

The Board shall periodically review Compliance Reports of all laws applicable to the Company prepared by the Company as well as steps taken by the Company to rectify instances of noncompliance The current Board of STEP comprises of 4 (four) directors, including 2 (two) independent directors.

DUTIES AND RESPONSIBILITES OF THE BOARD OF DIRECTORS

Governance

• Changing the mission and vision (any adjustment on the terms) and associated financial and social goals and indicators
• Approve the entry of new members
• Approve all incorporating documents and transfers to new legal structure

Strategy

• Approve and review strategic plan
• Approve and review business plan/operational plan
• Approve and review social performance management activities
• d. Validation of significant actions/activities/partnerships which are outside the scope of the business and strategic plan
• e. Approve and review action plans following the internal and external evaluations, surveys, analysis (satisfaction surveys, exit survey, SPI, ratings, staff satisfaction survey, SEP analysis...)

Policies

• Approve and review major policies, procedures and manuals (operations, HR...)

Policies for remuneration and overall guidelines on incentive pay

• The Board of Directors shall adopt a remuneration policy in accordance with the requirements of the rules and guidelines by law. The remuneration policy shall include a thorough description of the components of the remuneration of CEO /Managing Directors. The remuneration policy and the overall guidelines on incentive pay shall be adopted by the general meeting of STEP and the overall guidelines on incentive pay shall as soon as possible following the date of adoption.

Audit

• Recruitment of internal audit manager
• Approval of the yearly audit plan
• Validate special missions out of the annual plan
• Review quarterly audit reports and associated actions
• Selection of external audit firm and report

Finance

• Designate the authorizations on expenditure management (Bank account signatures, approval of expenses, etc.)
• Yearly budget and approval
• Approval of partnerships with major donors, lenders and investors
• Approve any decision concerning asset management

Operations

• Adding and amending financial or socio-economic products and services
• Opening/closing of branches
• Write-offs
• Change of Information Systems and Technology
• Review and feedbacks on monthly reports

Compliance

• The Board of Directors shall supervise the activities of STEP and ensure that STEP is properly managed and in compliance with STEP's Articles of Association, STEP’s general policies and guidelines and applicable laws and regulations.

COMMITTEES OF THE BOARD

To focus effectively on the issues and ensure expedient resolution of diverse matters, the Board constitutes a set of Committees with specific terms of reference / scope. The Committees shall operate as empowered agents of the Board as per their Charter / terms of reference.

While the RBI Guidelines mentioned earlier require the setting up of an Audit Committee, Asset Liability Committee, Risk Management Committee and Nominations Committee, the Companies Act, 2013 requires the Company to constitute an Audit Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee.

In compliance with the applicable provisions of the Act, RBI guidelines on Corporate Governance and in order to meet business exigencies, the Company has constituted Board committees.

The terms of reference, roles and responsibilities of the aforesaid Committees will be further aligned based on the changes in the regulations and business requirements with the approval of Board. STEP complies with the above requirements of committee constitution and have the following committees of the Board:

 

1. Audit, Compliance & Corporate Governance Committee

The Company has in place the Audit, Compliance & Corporate Governance Committee in accordance with the provisions of Companies Act, 2013 and RBI guidelines on Corporate Governance.

1. The Audit Committee shall consist of no less than three members of whom at least two members shall be independent of STEP and at least one of the independent members shall have accounting or audit qualifications.
2. Between them, the members shall possess such expertise and experience to provide updated insight into and experience in the financial, accounting and audit conditions of companies with shares listed for trading on a regulated market.
3. The Committee may invite such other executives to the Meetings of the Audit, Compliance & Corporate Governance Committee as they deemed fit and appropriate such as the Department heads of the Company or it may also meet without the presence of any such executives as well.
4. The executive’s staffs, Internal Auditor & the Representative from the Statutory Auditor shall be present in the Audit Committee Meetings.

The Audit Committee shall meet at least two times in a year.

The Quorum of the meeting shall be the minimum two members of which the Independent Director shall attend.

Reference Terms for the Committee

The Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall inter alia, include

1. The recommendation for appointment, remuneration and terms of appointment of auditors of the company;
2. Review and monitor the auditor’s independence and performance, and effectiveness of audit process;
3. Examination of the financial statement and the auditor’s report thereon;
4. Approval or any subsequent modification of transactions of the company with related parties;
5. Scrutiny of inter-corporate loans and investments;
6. Valuation of undertakings or assets of the company, wherever it is necessary;
7. Evaluation of internal financial controls and risk management systems;
8. Monitoring the end use of funds raised through public offers and related matters.
9. Conduct of the Information System Audit of the Internal Controls, Systems & Processes at least once in two years to assess operational risks faced by the Company.

 

1. Remuneration and Nomination Committee:

The Company has in place the Governance, Remuneration and Nomination Committee in accordance With the provisions of Section 178 of the Companies Act, 2013 and the rules made there under and in Compliance with RBI guidelines on Corporate Governance.

Chairman of the Committee shall be an Independent Director.

In the absence of the Chairman, the members of the Committee present at the meeting shall choose one amongst them to act as Chairman.

The Committee shall consist of a minimum 2 non-executive directors, majority of them being independent.

The Committee shall meet as and when necessary.

The quorum shall be at least two Directors.

Reference Terms for the Committee

1. To formulate a criteria for determining qualifications, positive attributes and independence of a Director.
2. To ensure ‘fit and proper’ status of proposed/ existing Directors
3. To recommend to the Board the appointment and removal of Senior Management
4. To carry out evaluation of Director’s performance and recommend to the Board appointment /removal based on his / her performance.
5. To recommend to the Board on (i) policy relating to remuneration for Directors, Key Managerial Personnel and Senior Management and (ii) Executive Directors remuneration and incentive.
6. To make recommendations to the Board concerning any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of an Executive Director as an employee of the Company subject to the provision of the law and their service contract;
7. Ensure that the level and composition of remuneration is reasonable and sufficient, relationship of remuneration to performance is clear and meets appropriate performance benchmarks,
8. To devise a policy on Board diversity;
9. To develop a succession plan for the Board and to regularly review the plan;
10. Review annually and approve the Company’s compensation policy

 

1. Risk & Fraud Control and Monitoring Committee:

The Company has in place the Risk & Fraud Control and Monitoring Committee in accordance with RBI guidelines on Corporate Governance for the purpose of monitoring the risk and to make suitable strategies to control.

The Committee consists of such members as may be defined by the Board

The Company Secretary of the Company shall act as a Secretary to this Committee.

The Committee shall meet once in a quarter and also as and when necessary to review and monitor the risk associated with business of the Company.

The quorum shall be at least two members.

Reference Terms for the Committee

1. To monitor and review the risk management plan;
2. To review operational risk (including sub risk for operational risk), information technology risk and integrity risk;
3. To take strategic actions to mitigate the risk associated with the nature of the business;
4. To appraise the Board of Directors at regular intervals regarding the process of putting in place a progressive risk management system, risk management policy and strategy;
5. To do such other acts, deeds and things as may be directed by the Board and that are required to comply with the applicable laws; and
6. To lay down procedure to inform Board members about the risk assessment and minimization procedures.

 

1. Asset Liability Management & Credit Policy Committee:

The Company has in place the Asset Liability Management & Credit Policy Committee in accordance with RBI guidelines. The Committee’s primary goal is to evaluate, monitor and approve practices relating to risk due to imbalances in the capital structure.

The Committee comprises of the members as determined by the Board.

The Company Secretary of the Company acts as a Secretary to this Committee as well.

The Committee shall meet once in a quarter and also as and when necessary to review and monitor the risk associated with business of the Company. The quorum shall be at least two members.

Reference Terms for the Committee

1. Addressing concerns regarding asset liability mismatches;
2. Achieving optimal return on capital employed while maintaining acceptable levels of risk relating to liquidity;
3. Addressing concerns regarding interest rate risk exposure; and
4. To do such other acts, deeds and things as may be directed by the Board and required to comply with the applicable laws.

 

1. Corporate Social Responsibility Committee

The Board has constituted the CSR Committee in accordance with the provisions of Section 135 of the Companies Act, 2013 and the rules made there under and to oversee social programs undertaken by the Company and monitor economic and social impact on beneficiary.

The Committee shall consist of three or more directors, out of which at least one director shall be an Independent Director.

The Company Secretary of the Company shall act as the Secretary to the Committee.

The Committee shall meet once as and when required

The quorum shall be at least two Directors.

Reference Terms for the Committee

1. To 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;
2. To recommend the amount of expenditure to be incurred on the activities;
3. To Monitor the Corporate Social Responsibility Policy of the company from time to time; and
4. To do such other acts, deeds and things as may be directed by the Board and required to comply with the applicable laws.

 

Others committee:

ADVISORY COMMITTEES:

Since the begging, STEP is inspired and supported by Entrepreneurs du Monde (EDM), a French NGO specialised on social microfinance. EDM is led by a team of microfinance professional from various sectors like finance, SPM, internal audit etc.  STEP received active support through regular visits of EdM’s technical expert and providing senior staff for foreign exposure.

Reference Terms for the Committee

• Providing support to the development of socio economic services
• Providing support in implementation of social performance management tools, including social performance assessment, measure of the levels of poverty of the partners, satisfaction surveys through at least one field visits.
• Providing support in implementation of effective financial management and controls at.
• Providing support to fundraising with organizations such as Kiva, WPF..etc for international debt fundraising.

CORE COMMITTEES

Core committee is formed with the experienced staffs usually the head of the departments of the organization. At present, 7 members constitute the core committee.  The core committee is headed by CEO.

Reference Terms for the Committee

• Preparing the 1^st draft for any policy and procedures.
• Follow up of regular activities and take flexible decision if required.
• In charge of implementing any recommendations comes from board.
• Review of action plan and take appropriate measures to ensure that good health of the organization.

COORDINATION COMMITTEES

Coordination committee is constituted by coordinator and branch managers. Coordination committee is headed by coordinator and meet every week.

Reference Terms for the Committee

• Review of weekly target and discuss any issue faced by branch staffs.
• Discussing weekly plan and transfer planning
• Review of disbursement planning of next week of the month

Appointment, Rotation & Succession Policy

Purpose:

This policy applies to the Board of Directors of STEP.

The purpose of the policy is to provide a process by which the board reviews whether to support for re-election directors who are required to retire by “rotation” each year, but who wish to stand for re-election.

The review process will occur annually and provides an opportunity for the Board to reassess not only the contributions of retiring directors, but also the blend of qualifications, experience and knowledge represented on the board, and to plan board succession accordingly.

Rotation Policy:

The Nomination Committee will not automatically support for re election a Director who is required to retire by virtue of Article 13 of the Article of Association and who wishes to stand for re-election.

In that circumstance, the Nomination Committee will consider whether to support the retiring director’s re-election and in doing so will consider the following:

• The retiring Director’s performance as a director, based on the annual Board Self Assessment;
• The retiring Director’s qualifications, experience and knowledge;
• The qualifications, experience and knowledge required on the board and the extent to which those qualifications and that experience and knowledge are represented on the board;
• Whether the retiring director has served on the board for a period which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of STEP.
• Any other matter the Nomination Committee considers appropriate.

Only after considering those matters will the Nomination Committee determine whether to nominate the retiring Director for re-election and to recommend that nomination to Annual Meeting of the Members.

Director’s Appointment Process:

Time to time, based on a recommendation from the Nomination Committee the Board of Directors shall discuss and make an assessment of the relevant competencies of the Board of Directors.

As part of these discussions the Board of Directors shall assess whether there are areas in which the competencies and knowledge of the Board of Directors and its members should be updated and whether it is composed in such a way that it can attend to its board responsibilities, including taking care of its overall and strategic tasks.

 The Board of Directors shall describe the competences it should hold to best perform its tasks.

Potential board members may be nominated or submit an application and the nomination or application will be accompanied by a detailed resume.  All potential members will be interviewed by a minimum of two Board members and will, if requested, supply references before being introduced to the Board for appointment. 

Prospective candidates may be invited to attend a Board meeting prior to selection to assist in the assessment process.

Board Member Criteria.  The Board will ensure that any individual elected to the Board demonstrates the following essential characteristics:

1. An understanding of and commitment to STEP’s Mission and Vision; 
2. Passionate about STEP’s goals;  
3. Available time to devote to STEP and a commitment in this respect; 
4. A good understanding of the role of a Board member within the organization including the requirement to make decisions in the best interest of STP, independent of other (external) allegiance;
5. Absence of personal or business interests that could potentially cause a conflict or an appearance of a conflict with the interests of STEP;
6. Trustworthy, dependable, of the highest integrity and able to work with the other members of the Board and the organization’s leadership

Meetings

The Board of Directors may host up to seven members. Members can propose to invite guests whose expertise could benefit STEP.

The Board of Directors shall hold at least 4 meetings including one strategy meeting a year (according to an annual meeting and work schedule determined in advance of each financial year). The Chairman shall furthermore convene meetings of the Board of Directors when necessary or when requested by a member of the Board of Directors.

The meetings of the Board of Directors shall be held at the registered offices of STEP or at another venue designated by the Chairman.

Requirements of Members

• It is highly recommended that all members go to the field a minimum of once a year to see STEP’s activities.
• All members are required to be physically present at a minimum of one meeting a year. Meetings could be conducted with video conference (Skype or other means) for the benefit of those not able to be physically present.

Meeting Frequency

• The Board of Director meets usually quarterly, as follows:
• 1^st meeting: April
• 2^nd meeting: July
• 3^rd meeting: October
• 4^th meeting: January

Additional meetings can be decided in case of need.

Information and Reporting

• All STEP Board of Directors agenda items must be forwarded to all Members 3 working days prior to the next scheduled meeting.
• All information and documents shared before and during the meetings and the minutes are strictly confidential.

Quorum Requirements

• Quorum shall consist of a majority of the active members and a majority of such quorum may decide any question at the meeting.

POLICIES ADOPTED BY THE COMPANY

The following policies have been framed and adopted by the Company:-

1. Policy on Fair Practices Code
2. Grievance Redressal Policy
3. Credit & Lending Policy
4. Human Resource Policy
5. Accounting policy