The government has released norms for appointment of relatives in companies, a decision that will allow directors or managers to engage services of close ones without seeking permission of the Centre. A company, however, will be required to seek the permission of the central government if monthly payment made to relatives is more than Rs 2,50,000, the Corporate Affairs Ministry said in a notification.
Further, with regard to selection of such relatives of directors or managers of a listed company, the ministry has maintained it would be done by the selection committee. Sub-rule (7) of rule 4 of Director’s Relatives (Office or Place of Profit) Rules, 2003, explains ‘Selection Committee’ as a committee, the majority of which consists of independent directors and an expert in the respective field from outside the company. However, it relaxed the same rule for unlisted and private companies, it said.
