Appointment
of Director Elected by Small Shareholders
A listed company may have one director elected by
such small shareholders in such manner and with such terms and conditions as
may be prescribed.
Explanation.—For the purposes of this section
“small shareholders” means a shareholder holding shares of nominal value of not
more than twenty thousand rupees or such other sum as may be prescribed.
Small Shareholders’ Director
(1) A listed company, may upon notice of not less
than one thousand small shareholders or one-tenth of the total number of such
shareholders, whichever is lower, have a small shareholders’ director elected
by the small shareholders:
COMMENT: nothing in this sub-rule shall
prevent a listed company to opt to have a director representing small
shareholders suo motu and in such a case the provisions of sub-rule (2) shall
not apply for appointment of such director.
(2) The small shareholders intending to propose a
person as a candidate for the post of small shareholders’ director shall leave
a notice of their intention with the company at least fourteen days before the
meeting under their signatures specifying the name, address, shares held and
folio number of the person whose name is being proposed for the post of
director and of the small shareholders who are proposing such person for the
office of director:
COMMENT: if the person being proposed does not
hold any shares in the company, the details of shares held and folio number
need not be specified in the notice:
(3) The notice shall be accompanied by a statement
signed by the person whose name is being proposed for the post of small
shareholders’ director stating -
(a) his Director Identification Number;
(b) that he is not disqualified to become a
director under the Act; and
(c) his consent to act as a director of the company
(4) Such director shall be considered as an
independent director subject to , his being eligible under sub-section (6) of
section 149 and his giving a declaration of his independence in accordance with
sub-section (7) of section 149 of the Act.
(5) The appointment of small shareholders’ director
shall be subject to the provisions of section 152 except that-
(a) such director shall not be liable to retire by
rotation;
(b) such director’s tenure as small shareholders’
director shall not exceed a period of three consecutive years; and
(c) on the expiry of the tenure, such director
shall not be eligible for re-appointment.
(6) A person shall not be appointed as small
shareholders’ director of a company, if the person is not eligible for
appointment in terms of section 164.
(7) A person appointed as small shareholders’
director shall vacate the office if -
(a) the director incurs any of the
disqualifications specified in section 164;
(b) the office of the director becomes vacant in
pursuance of section 167;
(c) the director ceases to meet the criteria of
independence as provided in sub-section (6) of section 149.
(8) No person shall hold the position of small
shareholders’ director in more than two companies at the same time:
COMMENT: the second company in which he has
been appointed shall not be in a business which is competing or is in conflict
with the business of the first company.
(9) A small shareholders’ director shall not, for a
period of three years from the date on which he ceases to hold office as a
small shareholders’ director in a company, be appointed in or be associated
with such company in any other capacity, either directly or indirectly.
DISCLAIMER: THE
ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING
AT THE TIME OF THE PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT
AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING
INITIATIVE.
THE AUTHOR
– CS DEEPAK SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND
CAN BE REACHED AT CONTACTHHPRO@GMAIL.COM OR 9910248911.
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