CII: Avoid cap on salary of independent directors

It appears from the ‘Report of the Committee to review offences under the Companies Act, 2013’ that the intent behind this amendment is to cover the remuneration received by an independent director within the meaning of ‘pecuniary relationship’ so that the independence of the director concerned does not get impacted, the chamber said.

“Any cap would be regressive to the current mechanism prescribed under the Companies Act, 2013 and the SEBI regulations. Obtaining income details of independent directors would be difficult as directors may not be willing to share the income information, especially in the light of Data Privacy Laws,” it said.

The total remuneration of non-executive directors, including independent directors, is capped by Section 197 of the Companies Act, 2013, it added. “A second cap on the remuneration of independent directors is not required,” it added. The total pecuniary relationship of an independent director with the company, its holding, subsidiary or associate company, or their promoters or directors, shall not exceed 25 per cent of his total income.