178. Nomination and Remuneration Committee and Stakeholders Relationship Committee
(1) The Board of Directors of every listed company and such other class or
classes of companies, as may be prescribed shall constitute the Nomination and Remuneration
Committee consisting of three or more non-executive directors out of which not less than
one-half shall be independent directors:
Provided that the chairperson of the company (whether executive or non-executive)
may be appointed as a member of the Nomination and Remuneration Committee but shall not
chair such Committee.
(2) The Nomination and Remuneration Committee shall identify persons who are
qualified to become directors and who may be appointed in senior management in accordance
with the criteria laid down, recommend to the Board their appointment and removal and shall
carry out evaluation of every director’s performance.
(3) The Nomination and Remuneration Committee shall formulate the criteria for
determining qualifications, positive attributes and independence of a director and recommend
to the Board a policy, relating to the remuneration for the directors, key managerial personnel
and other employees.
(4) The Nomination and Remuneration Committee shall, while formulating the policy
under sub-section (3) ensure that—
(a) the level and composition of remuneration is reasonable and sufficient to
attract, retain and motivate directors of the quality required to run the company
(b) relationship of remuneration to performance is clear and meets appropriate
performance benchmarks; and
(c) remuneration to directors, key managerial personnel and senior management
involves a balance between fixed and incentive pay reflecting short and long-term
performance objectives appropriate to the working of the company and its goals:
Provided that such policy shall be disclosed in the Board's report.
(5) The Board of Directors of a company which consists of more than one thousand
shareholders, debenture-holders, deposit-holders and any other security holders at any
time during a financial year shall constitute a Stakeholders Relationship Committee consisting
of a chairperson who shall be a non-executive director and such other members as may be
decided by the Board.
(6) The Stakeholders Relationship Committee shall consider and resolve the grievances
of security holders of the company.
(7) The chairperson of each of the committees constituted under this section or, in his
absence, any other member of the committee authorised by him in this behalf shall attend the
general meetings of the company.
(8) In case of any contravention of the provisions of section 177 and this section, the
company shall be punishable with fine which shall not be less than one lakh rupees but
which may extend to five lakh rupees and every officer of the company who is in default shall
be punishable with imprisonment for a term which may extend to one year or with fine which
shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees,
or with both:
Provided that non-consideration of resolution of any grievance by the Stakeholders
Relationship Committee in good faith shall not constitute a contravention of this section.
Explanation.—The expression ‘‘senior management’’ means personnel of the company
who are members of its core management team excluding Board of Directors comprising all
members of management one level below the executive directors, including the functional heads.