20 October 2011
what is the procedure of proportional representation? what is the manner in which directors are appointed? i mean minority SHs appoint their representative and majority also, so how do the powers are assigned to both of them.....is it proportionately?
plz explain by giving an example , if possible....
26 October 2011
Your query is valid..This has been prescribed under section 265 of companies act,1956
The concept behind the proportional representation is
Generally the directors are appointed by way of simple majority.Like wise, all the directors are appointed by the majority. Obviously the minority shall follow the orders of the majority
This will affect the right of the minority to appoint the director.
So to protect the right of the minority, the minority can appoint the director by way of proportional representation, along with the majority can appoint its directors..
Proportional representation means the shareholding of the minority requesting appointment of its director..
As you should also know that, Sec 265 overrides the entire companies act. so proportional representation is valid.
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