Shareholders should decide corporate salaries, not govt: Gupta
Corporate entities of both public and private sector will be free to fix the salaries of their top honchos, with Corporate Affairs Minister Prem Chand Gupta said.
By PTI |
NEW DELHI: Corporate entities of both public and private sector will be free to fix the salaries of their top honchos, with Corporate Affairs Minister Prem Chand Gupta saying that govt should not have any role in deciding the pay packages for those like Mukesh Ambani and Ratan Tata.
"I feel that the remuneration should be decided by the shareholders and stakeholders and not by the government institutes," Gupta said.
Why should the government have a role in fixing the salaries of people like Mukesh Ambani and Ratan Tata, who run their business conglomerates, the minister said.
Talking about the provisions of the new Companies Bill, which he would table in the coming session of Parliament, the minister said that it would not have provisions that tell what should be the salary of managing director of a company.
At present, he added, "beyond a certain level, a company has to approach the government for a decision or approval".
As per the present dispensation under the Companies Act, 1956, it is mandatory for a company to seek the approval of the central government if the remuneration to a director exceeds five per cent of the net profit.
In case of more than one directors, the compensation cannot exceed exceed 10 per cent of the profit without the permission of the central government.
As such, Mukesh Ambani and Ratan Tata take substantially less than five per cent of the net profit of the companies belonging to their groups, although Reliance Industries Chairman and Managing Director arguably is the top-paid executive in India.
"I feel that the remuneration should be decided by the shareholders and stakeholders and not by the government institutes," Gupta said.
Why should the government have a role in fixing the salaries of people like Mukesh Ambani and Ratan Tata, who run their business conglomerates, the minister said.
Talking about the provisions of the new Companies Bill, which he would table in the coming session of Parliament, the minister said that it would not have provisions that tell what should be the salary of managing director of a company.
At present, he added, "beyond a certain level, a company has to approach the government for a decision or approval".
As per the present dispensation under the Companies Act, 1956, it is mandatory for a company to seek the approval of the central government if the remuneration to a director exceeds five per cent of the net profit.
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In case of more than one directors, the compensation cannot exceed exceed 10 per cent of the profit without the permission of the central government.
As such, Mukesh Ambani and Ratan Tata take substantially less than five per cent of the net profit of the companies belonging to their groups, although Reliance Industries Chairman and Managing Director arguably is the top-paid executive in India.
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