Governance Principles

The following principles have been approved by the board of directors and, along with the charters and key practices of the board committees, provide the framework for the governance of SMART Group of Companies.

1. Role of Board and Management

SMART’s business is conducted by its employees, managers and officers, under the direction of the Chairman and the oversight of the board, to enhance the long-term value of the Company for its shareowners. The board of directors is elected by the shareowners to oversee management and to assure that the long-term interests of the shareowners are being served. Both the board of directors and management recognize that the long-term interests of shareowners are advanced by responsibly addressing the concerns of other stakeholders and interested parties including employees, recruits, customers, suppliers, communities, government officials and the public at large.

2. Functions of Board

The board of directors has 4 scheduled meetings a year (every quarterly) at which it reviews and discusses the performance of the Company, its plans and prospects, as well as immediate issues facing the Company. Directors have to attend all scheduled board and committee meetings. In addition to its general oversight of management, the board also performs a number of specific functions, including:

1. Selecting, evaluating and compensating the Chairman
2. Providing counsel and oversight on the selection, evaluation, development and compensation of senior management; such as MDs, Financial Controller,
3. Reviewing, monitoring and, where appropriate, approving fundamental financial and business strategies and major corporate actions;
4. Assessing major risks facing the Company — and reviewing options for their mitigation; and
5. Ensuring processes are in place for maintaining the integrity of the Company – the integrity of the financial statements, the integrity of compliance with law and ethics, the integrity of relationships with customers and suppliers, and the integrity of relationships with other stakeholders.

3. Qualifications

Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the interests of the shareowners. They must also have an inquisitive and objective perspective, practical wisdom and mature judgment.

Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the board for an extended period of time.

All directors, other than the Company’s Chairman will have a term limit of 10 years, additionally; directors will not be nominated for election to the board after their 70th birthday.

4. Independence of Directors

A majority of the directors will be independent directors, as independence is determined by the board, based on the guidelines set forth below.

All non-management directors will be independent. The board’s goal is that at least two-thirds of the directors will be independent.

For a director to be considered independent, the board must determine that the director does not have any direct or indirect material relationship with SMART. In addition to applying these guidelines, the board will consider all relevant facts and circumstances in making an independence determination.

A director will not be independent if:

• the director is employed by SMART, or an immediate family member is an executive officer of SMART;
• the director receives any direct compensation from SMART, other than director and committee fees.
• an immediate family member.
• the director is affiliated with or employed by SMART’s independent auditor, an immediate family member is a current partner of SMART’s independent auditor, or an immediate family member is affiliated with or employed by SMART’s independent auditor and such immediate family member personally works or worked on SMART’s audit.

5. Selection Process

Nomination Committee will prepare the candidate list of Independent Directors. The directors are elected by the shareowners.

6. Board Committees

The board has established the following committees to assist the board in discharging its responsibilities:

• Audit & Risk Committee
• Remuneration & Nomination Committee
• Governance Committee
• Sustainability & Compliance Committee

The committee chairs report the highlights of their meetings to the full board following each meeting of the respective committees..

7. Board Leadership

Group Chairman is the Chairman of the board, other than in times of leadership transition, and an independent director serves as the lead director. The independent directors have appointed the chairman of Nomination committee to serve as the lead director. If, at any time, this individual is unable to serve as the lead director, the chairman of the Remuneration committee shall serve as the lead director unless and until the independent directors determine otherwise.

8. Self-Evaluation

The board and each of the committees will perform an annual self-evaluation. Each year, each director will be asked to provide his or her assessment of the effectiveness of the board and its committees, as well as director performance and board dynamics. The individual assessments will be organized and summarized for discussion with the board and the committees at a subsequent meeting.

9. Setting Board Agenda

The board shall be responsible for its agenda. At March board meeting, the chairman of the board and the lead director will propose for the board’s approval key issues of strategy, risk and integrity to be scheduled and discussed during the course of the next fiscal year.

10. Ethics and Conflicts of Interest

The board expects SMART directors, as well as officers and employees, to act ethically at all times and to acknowledge their adherence to the policies comprising SMART’s code of conduct. The board will not permit any waiver of any ethics policy for any director or executive officer.

11. Remuneration (Compensation) of the Board

The Remuneration committee shall have the responsibility for recommending to the board compensation and benefits for independent directors. In discharging this duty, the committee shall be guided by the following goals: compensation should fairly pay directors for work required in a company; compensation should align directors’ interests with the long-term interests of shareowners; and the structure of the compensation should be simple, transparent and easy for shareowners to understand.