Regulation 19: Nomination and Remuneration Committee

Regulation 19 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Of the four mandatory committees, the NRC has the composition rule that is most often got wrong — because the mistake looks like good practice.

Companies frequently put the chairperson of the board in the chair of the NRC, on the reasoning that board appointments are the chair's natural domain. Under Regulation 19 the chairperson of the listed entity may be a member of the committee, but may not chair it.

At least three directors, all non-executive, with at least two-thirds independent. The chairperson of the committee is an independent director. The chairperson of the listed entity may be a member but cannot chair the committee. It meets at least once a year, and quorum is two members or one-third, whichever is greater, including at least one independent director.

Composition

The reason for the chair rule is straightforward once stated. The committee's job includes recommending the remuneration of the very people who run the company, and evaluating the performance of directors. A body chaired by the person at the centre of that structure cannot credibly do it.

"All members non-executive" also rules out something companies attempt: putting the managing director on the committee as a non-voting invitee and recording them as a member. An invitee is not a member — and if they are treated as one, the composition fails.

What the committee does

Board composition and succession. Formulate the criteria for determining qualifications, positive attributes and independence of a director; identify persons qualified to become directors and to join senior management; recommend their appointment and removal; devise a policy on board diversity; and recommend to the board whether to extend or continue the term of appointment of an independent director, on the basis of the performance evaluation.

Remuneration policy. Recommend to the board a policy on the remuneration of directors, key managerial personnel and other employees. The policy is expected to be built around three things: attracting and retaining people of the quality required, tying remuneration to performance benchmarks, and balancing fixed pay against incentive pay reflecting both short-term and long-term performance.

Performance evaluation. Formulate the criteria for evaluation of the performance of independent directors and of the board itself.

Senior management appointments. Recommend to the board all remuneration, in whatever form, payable to senior management.

Where the NRC's work shows up elsewhere

The committee's output is not self-contained; it feeds three other obligations.

The independent director's reappointment. An extension or continuation of an independent director's term rests on the NRC's recommendation, which in turn rests on the performance evaluation. A reappointment resolution proposed without a documented evaluation behind it is exposed, and proxy advisory firms look for exactly that gap. Independent directors →

Remuneration approvals at the general meeting. Where a single non-executive director's annual remuneration exceeds half of the total paid to all non-executive directors, or where remuneration to executive directors who are promoters crosses the specified limits, a special resolution is required each year — and the explanatory statement is built from the committee's reasoning. Board remuneration under Regulation 17 →

The annual report. Remuneration disclosures, the board diversity policy and the evaluation criteria all appear in the corporate governance report and the board's report. The annual report →

Key takeaways

• All members non-executive, at least three, two-thirds independent.
• The committee is chaired by an independent director.
• The listed entity's chairperson may be a member, never the chair.
• An invitee is not a member — do not record them as one.
• Meets at least once a year, quorum includes an independent director.
• Reappointment of an independent director runs through the NRC's evaluation.
• Board diversity policy is the committee's to devise, not the board's to assume.

Read next

• Regulation 17: Board of Directors of a Listed Entity
• Regulation 25: Independent Directors of a Listed Entity
• Regulation 20: Stakeholders Relationship Committee
• Regulation 21: Risk Management Committee

Disclaimer: Positions stated as on 5 September 2026. Verify the current text of the Listing Regulations and Part D of Schedule II on sebi.gov.in before relying on any requirement here.