Which of the following types of companies are required to constitute a Nomination and Remuneration Committee as per the Companies Act, 2013?a)All private companies with a paid-up capital of 10 crore rupees or more.b)All public companies having a turnover of 50 crore rupees or more.c)All public companies having outstanding loans exceeding 100 crore rupees.d)All public companies having a paid-up capital of 5 crore rupees or more.Correct answer is option 'B'. Can you explain this answer?

Question

Answer

According to the Companies Act, 2013, the Nomination and Remuneration Committee must be constituted by all public companies that have a turnover of 100 crore rupees or more. This committee is responsible for identifying qualified directors and senior management personnel, recommending their appointment and removal, as well as evaluating directors' performance.

Answer

Explanation:

Requirement under Companies Act, 2013:
- As per the Companies Act, 2013, all public companies with a turnover of 50 crore rupees or more are required to constitute a Nomination and Remuneration Committee.

Key Points:
- Private companies with a paid-up capital of 10 crore rupees or more are not required to constitute a Nomination and Remuneration Committee.
- Public companies having outstanding loans exceeding 100 crore rupees are also not mandated to form this committee.
- The threshold for constituting the committee is based on the turnover of the company, not on the paid-up capital.

Importance of Nomination and Remuneration Committee:
- The Nomination and Remuneration Committee plays a crucial role in ensuring transparency and accountability in the appointment and remuneration of directors and key managerial personnel.
- It helps in attracting and retaining top talent by implementing fair and competitive remuneration policies.
- The committee also ensures that the selection process for directors is unbiased and based on merit.

Conclusion:
- In conclusion, public companies with a turnover of 50 crore rupees or more are mandated to constitute a Nomination and Remuneration Committee as per the Companies Act, 2013. This committee plays a vital role in enhancing corporate governance practices and promoting the interests of all stakeholders.

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