• Shruti Sharma

Rule 6 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Updated: Oct 4

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Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended by Companies (Appointment and Remuneration of Managerial Personnel) Amendments Rules, 2020.   Appointment and Remuneration of Managerial Personnel Rules 2014 are applicable from 1st April 2014.


Rule 6 is read with section 200, "Central Government or company to fix a limit concerning remuneration."


Rule-6 specifies the Parameters for Consideration of Remuneration. The company must consider the following matters: –


1. the company's financial and operational performance over the previous three fiscal years.


2. the relationship between remuneration and performance.


3. the principle of proportionality in remuneration within the company, ideally through a rating mechanism that compares directors' compensation to that of other directors on the board who receive remuneration and employees or executives of the company.


4. if the remuneration policy for directors differs from the remuneration policy for other workers, and if so, explain.


5. the securities held by the director as of the end of the previous fiscal year, including options and details of the shares pledged.


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