Use more than the annual threshold
For a listed company within the applicable framework, Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 combines top-ten employee names with the stated other employee tests. Checked on 28 October 2026, this guide focuses on the domestic employee statement, distinct from the director-to-median ratio under Rule 5(1). A list of employees above ₹1.02 crore alone does not implement all the tests. ICSI statutory e-book: managerial-personnel Rule 5(2)–(3), including 2016 amendments.
Separate full-year and part-year populations
The rule's full-year limb uses aggregate remuneration not less than ₹1.02 crore. The part-year limb uses the stated aggregate rate not less than ₹8.50 lakh per month. Establish actual service periods and remuneration components from supported records. Do not compare a six-month employee's total solely with the full-year amount or assume that annualising every employee is the wording of both limbs. The examples stipulate complete full-month service and settled remuneration figures. ICSI statutory e-book: managerial-personnel Rule 5(2)–(3), including 2016 amendments.
Apply the top-ten requirement independently
Rank employees by the relevant remuneration drawn and preserve identifiers, service dates and the actual amounts. The top-ten requirement can produce names even when no employee reaches the separate annual threshold. Investigate ties and the legally appropriate statement instead of using an arbitrary employee number to suppress a disclosure. A person qualifying through several routes should be identifiable through each route in the working, without appearing as duplicated people in the final population. ICSI statutory e-book: managerial-personnel Rule 5(2)–(3), including 2016 amendments.
Review the ownership-linked limb separately
Rule 5(2)(iii) combines remuneration exceeding that drawn by the specified MD/WTD/manager comparator with equity holding of not less than 2%, counted by the employee alone or with spouse and dependent children. Verify both conditions, the relevant remuneration-period comparison and equity denominator. Do not count every relative or all family shareholding automatically. The worked example stipulates one appropriate comparator and independently established holdings. ICSI statutory e-book: managerial-personnel Rule 5(2)–(3), including 2016 amendments.
Complete the particulars, not only the names
Sub-rule (3) calls for designation, remuneration, employment nature, qualifications and experience, commencement date, age, previous employment, the relevant equity percentage and specified director/manager relationship details. Link the final statement to payroll and personnel records. The overseas-posting circulation provisos require separate treatment; the examples deliberately cover domestic employees and do not silently extend their simplified statement process to those cases. ICSI statutory e-book: managerial-personnel Rule 5(2)–(3), including 2016 amendments.
Keep applicability and other disclosures separate
Document listed-company status and any relevant exception or special regime before applying this guide. It does not decide the broader reach of every sub-rule to every company class. Complete other prescribed Board-report and securities-law disclosures separately. Preserve the population tests, component definitions, ranking, ownership evidence and final statement; a high-salary threshold is a disclosure screen, not a remuneration cap or permission to pay. ICSI statutory e-book: managerial-personnel Rule 5(2)–(3), including 2016 amendments.
Applicable primary references
ICSI statutory e-book: managerial-personnel Rule 5(2)–(3), including 2016 amendments
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Annual equality is included
Assume domestic employee A serves throughout the financial year and receives settled relevant remuneration ₹102 lakh. The not-less-than ₹102 lakh annual test is met exactly.
Illustrative example 2: Below the annual limb is not final exclusion
Assume full-year employee B receives ₹101 lakh. That is ₹1 lakh below the annual limb. B may still belong in the top-ten or ownership-linked population; the calculation alone does not exclude B from the statement.
Illustrative example 3: Part-year equality
Assume six full months of domestic service at a settled aggregate rate ₹8.50 lakh per month, total ₹51 lakh. The part-year rate test is met even though the total is below ₹102 lakh.
Illustrative example 4: Part-year amount below the rate limb
Assume four full months and relevant remuneration ₹32 lakh at a uniform aggregate rate. Rate ₹8 lakh per month is ₹0.50 lakh below the stated ₹8.50 lakh test. Check top-ten and the other limb independently.
Illustrative example 5: Ownership and remuneration conditions together
Assume the legally appropriate annual comparator receives ₹80 lakh, employee E receives ₹90 lakh, and verified equity holdings are employee 1%, spouse 0.6% and dependent child 0.5%. Combined 2.1% exceeds 2% by 0.1 percentage point; remuneration exceeds the comparator by ₹10 lakh. Both stipulated tests are met.
Illustrative example 6: Top-ten names below the salary threshold
Assume eleven domestic employees, all serving throughout the year, draw respectively ₹90, ₹85, ₹80, ₹75, ₹70, ₹65, ₹60, ₹55, ₹50, ₹45 and ₹40 lakh, with no other qualifying limb. None reaches ₹102 lakh, but the top-ten requirement selects ranks one to ten. The eleventh employee does not enter through that ranking limb.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm company and statement scope | Listed-company framework and domestic example population |
| 2 | Reconcile remuneration components | Payroll, contracts and supported measurement basis |
| 3 | Validate service periods | Full-year versus part-year dates |
| 4 | Rank the employee population | Actual remuneration drawn and tie review |
| 5 | Test full-year threshold | Aggregate at least ₹1.02 crore |
| 6 | Test part-year rate | Relevant aggregate rate at least ₹8.50 lakh monthly |
| 7 | Test ownership-linked conditions | Appropriate comparator and permitted combined equity holdings |
| 8 | Merge the qualifying population | Separate test flags with no duplicate people |
| 9 | Complete sub-rule (3) particulars | Personnel, shareholding and relationship evidence |
| 10 | Review final Board-report treatment | Other disclosures and separately analysed overseas exceptions |
Sixteen practitioner FAQs
1. Does this guide replace the director-to-median ratio?
No. It addresses the distinct Rule 5(2) employee statement.
2. Is the annual threshold the only population test?
No. Top-ten, part-year and ownership-linked tests need separate checks.
3. Is equality at ₹1.02 crore included?
Yes. The full-year wording is not less than that amount.
4. Can a part-year employee be tested only against the annual total?
No. Apply the stated monthly-rate limb to the appropriate facts.
5. Is equality at ₹8.50 lakh monthly included?
Yes, subject to the established relevant aggregate rate and population.
6. Do the examples prescribe handling of irregular bonuses?
No. Their remuneration inputs are settled; determine actual component and period treatment independently.
7. Can a below-threshold employee still appear?
Yes. Another limb, including the top-ten requirement, may select that employee.
8. Can a payroll annualisation replace both statutory limbs?
No. Preserve the distinction between full-year aggregate and part-year rate.
9. Is a 2% holding alone enough for limb (iii)?
No. The stated remuneration-comparison condition must also be met.
10. Which family holdings are expressly relevant here?
The employee's holdings together with spouse and dependent children under the stated wording.
11. Is the remuneration comparison merely a 2% arithmetic test?
No. Identify the appropriate MD/WTD/manager comparator and comparable period basis.
12. Should one employee appear three times if three tests are met?
Retain separate test flags but avoid duplicating the same person in the final statement population.
13. Are only names required in the statement?
No. Sub-rule (3) specifies additional employee particulars.
14. Does the article apply the overseas circulation provisos to its examples?
No. It expressly focuses on domestic employees; overseas cases require separate review.
15. Does a disclosure threshold impose a pay cap?
No. Remuneration legality and approvals are separate questions.
16. What supports a reproducible result?
The complete employee population, remuneration basis, service dates, ranking, ownership evidence and merged qualifying list.
Conclusion
Build the employee statement through separate top-ten, full-year, part-year and ownership-linked tests, preserving the distinct disclosure population.