The ministry of company affairs has endorsed the views of the JJ Irani Committee to free managerial remuneration from government control.
This is proposed to be part of the new companies law being drafted by the ministry.
"The decision on how and what the directors should be paid is best left to a company, subject to approvals by shareholders. There are no such restrictions in other countries. But we will strengthen the disclosure requirements to ensure transparency and accountability," a ministry official told Business Standard.
The Companies Bill is likely to be introduced in Parliament in the winter session.
For companies making inadequate profits or suffering losses, the new law is expected to specify that their board of directors will have to consider the recommendations of the remuneration committees of such firms and take creditors