Can an executive Director form part of the Nomination and Remuneration Committee?

The answer to this is both yes and no.

Let's find out why...

Definition:

“Executive Director” means a whole time director as defined in clause (94) of section 2 of the Act; ("whole-time director" includes a director in the whole-time employment of the company;

Analysis under the Companies Act, 2013 and SEBI LODR Regulations:
Section 178(1) of the Companies Act, 2013 mandates that only Non-Executive Directors can form part of the NRC, with at least one-half of the committee members being Independent Directors.

Similarly, Regulation 19 of the SEBI LODR Regulations prescribes comparable conditions, further requiring that the Chairperson of the NRC be an Independent Director.

These provisions seem to unequivocally exclude an Executive Director from serving on the NRC. 

So clearly we can see there is no scope of the executive director to be part of NRC. Is it so? Like this you should not think.

Exemption:
Both Section 178(1) of the Companies Act, 2013 and Regulation 19(2) of the SEBI LODR Regulations contain a proviso allowing the Chairperson of the company, whether Executive or Non-Executive, to be appointed as a member of the NRC. However, it is expressly provided that the Chairperson of the company cannot chair the NRC.

Conclusion:
An  Executive Director who also serves as the Chairperson of the company may be appointed as a member of the NRC, but they are disqualified from chairing the committee. This exception underscores the nuanced interpretation required in such cases.

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From the desk of CS Sharath