MCA creates restriction to the remuneration payable to Independent directors



Quick Summary
The Ministry of Corporate Affairs (MCA) has implemented new restrictions concerning the remuneration that can be paid to independent directors. These changes are amendments to Schedule V of the Companies Act, 2013. The notification, dated 18th March 2021, inserts specific wording to clarify that these remuneration rules apply to 'other director or directors' in addition to managerial personnel.

The Ministry of Corporate Affairs has created certain restrictions on the remuneration payable to independent directors under Schedule V of the Companies Act, 2013. Read the official notification below:

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (ii)] 

Government of India 
MINISTRY OF CORPORATE AFFAIRS 
Notification 

New Delhi, 18th March, 2021. 

MCA Restricts Independent Director Pay Under Companies Act

S.O.  (E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 467 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following amendments to Schedule V of the said Act, namely-

2. In Schedule V of the Companies Act, 2013, in PART II, under the heading "REMUNERATION". - 

(a) in Section I, in the first para, after the words "managerial person or persons", the words "or other director or directors" shall be inserted; 

(b) in Section (i) after the words "managerial person", wherever occurred, the words "or other director" shall be inserted; 

To view / download the complete official notification, find the enclosed file

FAQ :

The MCA has created restrictions on the remuneration payable to independent directors.

Schedule V of the Companies Act, 2013, has been amended.

The notification was issued on 18th March 2021.

The amendments insert the words 'or other director or directors' after 'managerial person or persons' and 'or other director' after 'managerial person' to clarify the scope of remuneration rules.

No, the amendments clarify that the remuneration rules now explicitly include 'other director or directors'.




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