Subsidiary Operating Charter

Preamble

This Constitution establishes the governance framework for Operating Companies, subsidiaries of MetaCompany Private Limited ("Parent" or "HoldCo").

This Constitution is subordinate to and must be read in conjunction with the Constitution of MetaCompany Private Limited ("Federal Constitution"). In case of conflict, the Federal Constitution prevails.

The Company is founded on the principle that owner-operators, empowered with autonomy and aligned through equity ownership, build the best businesses.

Part I: Identity & Purpose

Article 1: Company Identity

Article 2: Business Purpose

2.1 Core Business

The Company shall engage in: [Describe specific business activity - e.g., "development and sale of enterprise software for warehouse management"]

2.2 Geographic Scope

The Company may operate in: [Define territory - e.g., "India and other countries as approved by the Board"]

2.3 Scope Limitations

The Company shall NOT, without Parent approval:

• Engage in businesses materially different from Core Business
• Expand beyond approved Geographic Scope
• Compete with other group Operating Companies

2.4 Scope Expansion

The Company may request expansion of scope by written proposal to Parent. Parent shall respond within 30 days; silence deemed approval for incremental expansions.

Article 3: Values

In addition to the Core Values in the Federal Constitution, this Company commits to:

Article 4: Step-Down Subsidiaries

4.1 Authority to Create

The Company may establish or acquire subsidiaries ("Step-Down Subsidiaries") only with prior written approval from Parent per Article 2.5 of the Federal Constitution.

4.2 Depth Restriction

The Company acknowledges the two-level depth limit:

• This Company is a Level 1 (Operating Company)
• Any subsidiary of this Company is Level 2 (Step-Down Subsidiary)
• Step-Down Subsidiaries shall NOT create their own subsidiaries (Level 3) without Parent Board approval

4.3 Governance Model

Upon creation of a Step-Down Subsidiary, Parent shall designate either:

4.4 Owner-Operator Accountability

Under the Delegated Model (default), the Owner-Operator of this Company:

• Is responsible for Step-Down Subsidiary performance
• Must ensure Step-Down compliance with group policies
• Bears consequences if Step-Down breaches Federal Constitution
• Benefits from Step-Down profits flowing through to this Company

4.5 Minimum Governance for Step-Down Subsidiaries

Regardless of model, Owner-Operator shall ensure each Step-Down Subsidiary:

• Maintains proper books of account per Ind AS
• Provides timely information for group consolidation
• Follows group accounting policies
• Operates only within Permitted Sectors
• Has appropriate Board oversight
• Distributes minimum dividends to this Company

4.6 Reporting

Step-Down Subsidiary financials shall be included in this Company's reporting to Parent:

• Monthly: Revenue and cash of Step-Downs (consolidated view)
• Quarterly: Full Step-Down financials as part of Company reporting
• Annually: Audited Step-Down financials (may be consolidated with Company)

4.7 Unwinding

Parent may require unwinding of Step-Down Subsidiaries per Federal Constitution Article 2.5.6. Company and Owner-Operator shall cooperate with such unwinding.

Part II: Ownership Structure

Article 5: Share Capital

5.1 Authorized Capital

₹[Amount] divided into [Number] equity shares of ₹10 each

5.2 Issued Capital

As of the date of this Constitution:

5.3 No Further Dilution

Parent commits not to dilute Owner-Operator's percentage without Owner-Operator's written consent, except:

• To cure a breach by Owner-Operator
• As part of pre-IPO restructuring with equivalent value

Article 6: Classes of Shares

6.1 All shares are ordinary equity shares with equal rights to:

• Dividends
• Voting (one share, one vote)
• Capital on winding up

6.2 No differential voting rights exist as of this Constitution

6.3 Creation of any new class of shares requires:

• Approval of Board
• Approval of shareholders by Special Resolution
• Approval of Parent under Federal Constitution

Part III: Governance

Article 7: Board of Directors

7.1 Composition

Minimum Board size: 3 | Maximum Board size: 6

7.2 Appointment Rights

• Owner-Operator has right to appoint 2 Directors (including self as MD)
• Parent has right to appoint 1 Director
• 1 Independent Director appointed by mutual agreement
• Additional Directors (up to max 6) appointed by Board majority

7.3 Managing Director

• Owner-Operator (or nominee approved by Parent) shall be Managing Director
• MD is the Chief Executive of the Company
• MD has all powers of management except those reserved to Board or Parent
• MD cannot be removed except:
  • Voluntary resignation
  • Termination for Cause (as defined in Article 18)
  • Death or permanent disability

7.4 Nominee Director Rights

Parent's Nominee Director:

• Has right to receive all Board papers
• Has right to attend all Board meetings
• Has one vote like any other Director
• Shall NOT have veto power on operational matters
• Shall primarily observe and advise, intervening only on Federal Matters

7.5 Independent Director

• Shall meet independence criteria under Companies Act
• Shall serve as tie-breaker in disputed matters
• Shall chair Audit oversight (until formal Audit Committee constituted)

Article 8: Board Meetings

8.1 Frequency

• Minimum 4 meetings per year (once per quarter)
• Additional meetings as MD or any 2 Directors may call

8.2 Notice

• 7 days written notice for scheduled meetings
• 48 hours for urgent meetings (with consent of majority Directors)

8.3 Quorum

• Majority of Directors
• Must include at least one Owner-Operator appointed Director
• Must include Parent Nominee for Federal Matters

8.4 Decisions

• Simple majority for ordinary matters
• Unanimous for matters specified as requiring unanimity
• Federal Matters require Parent approval as per Federal Constitution

8.5 Circular Resolutions

Permitted for routine matters; signed by all Directors

Article 9: Board Reserved Matters

The following require Board approval (not just MD decision):

9.1 Annual Matters

• Annual budget and business plan
• Audited financial statements
• Dividend declaration

9.2 Significant Transactions

• Contracts exceeding ₹25 Lakhs annual value
• Employment offers exceeding ₹20 Lakhs CTC
• Capital expenditure exceeding ₹10 Lakhs per item

9.3 Structural Matters

• Proposal to create or acquire a Step-Down Subsidiary (before seeking Parent approval)
• Governance decisions for existing Step-Down Subsidiaries
• Proposal to unwind, merge, or sell Step-Down Subsidiaries

9.4 Governance

• Appointment of Key Managerial Personnel (other than those appointed by Owner-Operator right)
• Changes to HR policies affecting compensation structure
• Related party transactions

9.5 Legal

• Initiating litigation exceeding ₹10 Lakhs
• Settling claims exceeding ₹5 Lakhs
• Entering regulated businesses

Note: Thresholds may be updated annually by Board

Article 10: Shareholder Meetings

10.1 Annual General Meeting

Within 6 months of financial year end:

• Adopt audited accounts
• Declare dividends
• Appoint/ratify auditors
• Appoint/re-appoint Directors

10.2 Special Resolutions Required For

• Amendment to Articles/Memorandum
• Change in name or objects
• Issue of new shares
• Buyback of shares
• Any matter requiring 75% approval under Companies Act

10.3 Voting

• Show of hands or poll as Chairman directs
• Parent and Owner-Operator may agree to vote together on specified matters via side letter

Part IV: Management & Operations

Article 11: Powers of Managing Director

11.1 General Authority

The Managing Director has authority over all matters NOT reserved to:

• The Board (Article 9)
• The Parent under Federal Constitution (Article 6 of Federal Constitution)

11.2 Specific Powers Include

• Hiring and termination of employees
• Setting compensation within budgeted amounts
• Signing contracts within authorized limits
• Managing customer and vendor relationships
• Making product and technology decisions
• Day-to-day expenditure within budget
• Representing Company in ordinary business dealings

11.3 Delegation

MD may delegate powers to employees; MD remains responsible for delegated actions.

Article 12: Key Managerial Personnel

12.1 Mandatory KMP

• Managing Director: [Owner-Operator Name]
• Chief Financial Officer: [Name] — appointed with Parent consent
• Company Secretary: [Name or "To be appointed when required"]

12.2 CFO Special Provisions

The CFO:

• Is appointed by MD with Parent approval (not to be unreasonably withheld)
• Can only be terminated with Parent approval
• Reports functionally to both MD and Parent CFO for consolidation matters
• Has duty to flag concerns about financial reporting to Parent Nominee Director
• This dual reporting is not a lack of trust but a control for consolidated public company requirements

12.3 Other Key Roles

The following roles (when filled) report to MD:

• Chief Technology Officer
• Head of Sales/Business Development
• Head of Delivery/Operations
• Head of Human Resources

Article 13: Operational Autonomy

13.1 Restatement of Autonomy

The Company and Owner-Operator have COMPLETE operational autonomy within:

• This Constitution
• The Federal Constitution
• Applicable law

13.2 No Micromanagement

Parent and its representatives shall not:

• Direct employees other than through MD
• Impose processes beyond minimum reporting requirements
• Require attendance at group meetings beyond quarterly reviews
• Second-guess operational decisions that are within Owner-Operator authority

13.3 Support on Request

Owner-Operator may request Parent support for:

• Recruitment of senior talent
• Technology architecture review
• Commercial negotiations
• Legal or compliance matters

Parent shall provide reasonable support at no cost for matters benefiting the group; specialist support may be charged at cost.

Part V: Financial Management

Article 14: Budget & Planning

14.1 Annual Budget

• MD to present annual budget to Board by January 31 for following FY
• Budget includes: Revenue, Expenses, Capex, Headcount, Profit target
• Board approves budget by February 28
• Approved budget is MD's authority to spend without further approval

14.2 Budget Variances

• Variances up to 10% on any line item: MD discretion
• Variances 10-20%: Inform Board
• Variances beyond 20%: Board approval required for continued variance

14.3 Mid-Year Revision

Budget may be revised mid-year by Board if material changes in business environment.

Article 15: Financial Controls

15.1 Bank Accounts

• Company shall maintain accounts with [Bank Name(s)]
• Signatories: MD and CFO (joint for amounts exceeding ₹5 Lakhs)
• Parent Nominee Director to be added as signatory for oversight (not for routine operations)

15.2 Expenditure Authorization

15.3 Petty Cash

Maximum petty cash float: ₹25,000

Article 16: Profit Distribution

16.1 Minimum Dividend

As per Federal Constitution Article 10:

• Minimum 30% of PAT as dividend, OR
• Such amount as ensures minimum remittance to Parent
• Whichever is higher

16.2 Dividend Process

• CFO to calculate distributable profits within 45 days of year end
• Board to recommend dividend
• Shareholders to approve at AGM
• Dividend paid within 30 days of declaration

16.3 Interim Dividend

• Board may declare interim dividend
• Based on profits of current year until the date
• Counted toward minimum annual dividend

16.4 Retention

Profits beyond minimum dividend may be retained for:

• Approved capex
• Working capital for demonstrated growth (receivables tied to revenue growth)
• Reserves up to 6 months' operating expenses

Retention beyond these limits requires Parent approval.

Article 17: Financial Reporting

17.1 To Parent (as per Federal Constitution)

17.2 To Board

• Monthly MIS pack
• Quarterly Board pack (full financials + commentary)
• Annual report

17.3 Formats

Per templates in Federal Constitution Schedule C

Article 18: Audit

18.1 Statutory Audit

• Auditor appointed by Parent (or parent-approved firm)
• Audit to be completed within 45 days of year end
• Auditor to present findings to Board

18.2 Internal Controls

Company shall maintain internal controls appropriate to its size:

• Segregation of duties where feasible
• Approval matrices
• Periodic reconciliations
• Documentation of significant transactions

18.3 Parent Audit Access

Parent's internal audit function has right to:

• Access books and records
• Interview employees
• Review systems and controls
• Report findings to Parent Board

This right shall be exercised reasonably and not disruptively.

Part VI: Owner-Operator Status

Article 19: Termination for Cause

19.1 Definition of Cause

• Fraud, embezzlement, or misappropriation of funds
• Material misrepresentation in financial reporting
• Conviction for criminal offense involving moral turpitude
• Willful and persistent breach of this Constitution or Federal Constitution
• Gross negligence causing material harm to Company
• Breach of non-compete during tenure

19.2 Process

• Written notice specifying alleged Cause
• 30 days to cure (if breach is curable)
• Board meeting to determine Cause (Owner-Operator may present defense)
• Decision requires Parent Nominee Director's concurrence
• Appeal to arbitration available

Article 20: Good Leaver

20.1 Definition

Owner-Operator is a Good Leaver if exit is due to:

• Voluntary resignation after 3-year lock-in with 6-month notice
• Death or permanent disability
• Termination without Cause by Company
• Material breach by Parent of its obligations

20.2 Good Leaver Consequences

• Equity bought back at Fair Market Value
• Non-compete reduced to 1 year

Article 21: Bad Leaver

21.1 Definition

Owner-Operator is a Bad Leaver if exit is due to:

• Termination for Cause
• Voluntary exit within lock-in period (except for Company breach)
• Breach of non-compete

21.2 Bad Leaver Consequences

• Equity bought back at Book Value (lower of cost or net asset value)
• Non-compete strictly enforced for full 2 years

Article 22: Non-Compete & Non-Solicit

22.1 During Tenure

Owner-Operator shall not:

• Engage in any competing business
• Hold equity in any competing business (except <1% in listed companies)
• Provide services to any competitor

22.2 Post-Exit Non-Compete

For 2 years after exit (1 year for Good Leaver):

• Not engage in competing business in same geography
• Not solicit Company employees
• Not solicit Company customers for competing products

22.3 Definition of Competing Business

[Define based on Company's business - e.g., "Any business providing warehouse management software to enterprises in India"]

Article 23: Confidentiality

23.1 Confidential Information

All non-public information about Company, Parent, and group companies including:

• Financial information
• Customer lists and pricing
• Technology and source code
• Business strategies
• Employee information
• Terms of this Constitution

23.2 Obligations

• Not disclose to any third party
• Use only for Company purposes
• Protect with reasonable security measures
• Return or destroy on exit

23.3 Duration

Confidentiality obligation survives exit indefinitely for trade secrets; 3 years for other confidential information.

Part VII: Related Party Transactions

Article 24: Identification

24.1 Related Parties Include

• Parent company
• Other subsidiaries of Parent
• Directors and their relatives
• Key Managerial Personnel and their relatives
• Entities in which above have significant influence

24.2 Register

Company shall maintain register of related parties; updated annually.

Article 25: Approval Process

25.1 Thresholds

25.2 Arm's Length

All related party transactions must be at arm's length:

• Comparable to market terms
• Documented with rationale
• Reviewed by CFO

25.3 Standing Arrangements

Recurring transactions (e.g., shared services from Parent) may be approved annually with per-transaction limits.

Article 26: Intra-Group Transactions

26.1 Permitted Transactions

• Dividends to Parent (as per Article 16)
• Shared services from Parent (at cost)
• Brand license (if applicable, at agreed rate)
• Working capital support from Parent (at documented interest rate)

26.2 Transfer Pricing

All intra-group transactions must comply with transfer pricing regulations under Income Tax Act.

Part VIII: Exit Mechanisms

Article 27: Owner-Operator Exit

27.1 Put Option

After 3-year lock-in, Owner-Operator may require Parent to buy equity:

• Written notice with 6-month notice period
• Valuation as per Article 29
• Payment within 12 months of valuation

27.2 Parent Call Option

Parent may buy Owner-Operator's equity only if:

• Owner-Operator is terminated for Cause, OR
• Company has 3 consecutive years of losses, OR
• Owner-Operator agrees voluntarily

27.3 Tag-Along

If Parent sells its stake to third party, Owner-Operator may sell equity to same buyer on same terms.

27.4 Drag-Along

If Parent and Owner-Operator together holding 90%+ agree to sell to third party, remaining shareholders must sell on same terms.

Article 28: IPO

28.1 Decision

IPO decision made at Parent level; this Company shall cooperate fully.

28.2 Pre-IPO Restructuring

Company agrees to:

• Reorganization of share capital if required
• Merger into Parent or holdco structure if required
• Conversion of all classes to single class of shares
• Such other changes as required for listing

28.3 Owner-Operator Rights on IPO

• Pro-rata participation in IPO (subject to lock-in requirements)
• Employment/consulting agreement if continued involvement desired
• Board seat or observer rights in listed entity (if significant stake)

Article 29: Valuation

29.1 For Exit Transactions

Fair Market Value determined by:

• Mutual agreement, OR
• Independent valuer appointed by mutual agreement, OR
• Average of two valuers (one each appointed by parties) if disagreement

29.2 Valuation Method

• Primary: Discounted Cash Flow
• Cross-check: Revenue or EBITDA multiple based on comparable transactions
• Floor: Book Value

29.3 Valuation Costs

Shared equally unless one party's valuation is more than 30% different from final value (then that party bears full cost).

Part IX: General Provisions

Article 30: Notices

30.1 Method

Notices may be given by:

• Email (to registered email addresses)
• Registered post / courier
• Hand delivery

30.2 Addresses

Article 31: Dispute Resolution

As per Federal Constitution Article 20:

• Good faith discussion (30 days)
• Mediation (60 days)
• Arbitration under A&C Act, seat at Hyderabad

Article 32: Amendment

32.1 Process

This Constitution may be amended by:

• Board approval (unanimous)
• Shareholder approval (Special Resolution)
• Parent approval (if Federal Matters affected)

32.2 Notice

Proposed amendments circulated 15 days before meeting.

Article 33: Severability

If any provision is invalid, remaining provisions continue in force.

Article 34: Entire Agreement

This Constitution, together with Federal Constitution and Shareholders' Agreement, constitutes the entire agreement between parties regarding governance of Company.

Schedules

Schedule A: Initial Shareholding

Schedule B: Board Composition

Schedule C: Financial Authorization Matrix

Copy from Article 15.2

Schedule D: Business Scope

Core Business: [Detailed description]

Approved Products/Services:

1. [Product 1]
2. [Product 2]
3. [Service 1]

Approved Geographies:

1. India
2. [Others if approved]

Excluded Activities:

1. [Any specific exclusions]