Experts oppose govt proposal to cap income of independent directors

The panel recommended the cap to ensure that excess pecuniary rewards do not compromise the independence of such directors

The government’s proposal to cap the income of independent directors has been opposed by experts. 

A government-appointed panel has recommended that an independent director should not derive more than 20 per cent of her/his total income from one company. The government is considering implementing this by amending the Company’s Act through an Ordinance. Experts say this will make it unattractive for people to take up directorship in companies.

Abhimanyu Bhandari, a Supreme Court advocate, says, “Such a cap would discourage the best and most talented from joining a company. Independence of directors cannot be secured by capping their income.”

Atul