Government Nod Not Must For Executive Compensation In Public Firms
Public companies will no longer require government approval for paying salaries beyond a certain threshold to their managerial personnel, according to a communication.
The Corporate Affairs Ministry has amended provisions under Companies Act, 2013 in this regard. This will be applicable for public companies and not private companies.
Generally, those having more than 200 members are classified as public companies and they have to follow stricter corporate governance norms. There are more than 70,000 public companies, as per official data.
Now, such payments can be approved by a company's shareholders through a special resolution.
Financial institution or non-convertible debenture holders, approval of the entity concerned would be required before the remuneration proposal is put up to the shareholders, in case a company has defaulted in payment of dues to any bank.
The ministry said the move is in pursuance of the policy of minimum government-maximum governance and providing ease of doing business to the law-abiding corporates of this country.