Govt panel recommends cap on remuneration of independent directors

This was part of the recommendations to de-clog NCLT by the committee on reviewing penal provisions of the Companies Act

A panel has recommended capping the remuneration of an independent director from a company to one-fifth of his gross annual income to ensure his independence.

The committee, headed by Corporate Affairs Secretary Injeti Srinivas, suggested a ceiling on independent director’s remuneration in terms of percentage of income in order to prevent any material pecuniary relationship, which could impair his independence on the board of the company.

The committee submitted its report to Finance Minister Arun Jaitley on Monday.

Experts said the high fees by any one company can compromise independent directors' independence.

These directors are paid in two ways —