The Nomination and Remuneration Committee (NRC) is a board committee that deals with the appointment and remuneration of directors and senior management. Section 178 of the Companies Act, 2013 governs the NRC.
The applicability
The NRC is mandatory for:
- Listed companies
- Public companies with a paid-up capital of ₹10 crore or more
- Public companies with a turnover of ₹100 crore or more
- Public companies with outstanding loans, debentures or deposits of ₹50 crore or more
The composition
The NRC must have at least three directors, with a majority of independent directors. The chairperson must be an independent director. The committee must meet at least once a year.
The role
The NRC:
- Identifies persons who are qualified to become directors
- Recommends the appointment and removal of directors
- Formulates the criteria for evaluating the performance of directors
- Recommends the remuneration policy for directors and senior management
- Reviews the remuneration of the directors and senior management
The practical points
The company should constitute the NRC with the required composition. The committee should meet at least once a year. The minutes should record the decisions. The company should disclose the NRC's composition and role in the board's report.
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