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Small Shareholders..

Sunali (Learner) (1317 Points)

04 January 2009

Pls Advise..with reference to Company Law Provisions..

1) Is it necessary for the Company to appoint a Director to represent the "Small Shareholders"...?

2) Can such a Director be removed by the Company before the expiry of his period of appointment without the consent of the "Small Shareholders"..?

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3 Replies

gourav (student) (113 Points)
Replied 04 January 2009

1) As per sec. 252 of the companies act it is not mandetory to appoint small shareholer director because the word are used " comapny may appoint........."

But in as per companies (appointment of small shareholder directors) Rules,2001 if a campany receives a notice (14 days) for the appointment of small shareholder director from at least 1/10 of small shareholders than it is mandetory for the company to appoint small shareholder director.

2) Yes as per provisions of companies act such director can be removed by the compay uner sec.284 without the consent of small shareholders.

You can think that such removal is highly illogical because this provision vanishes the intention of this small shareholder directors rules.

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shailesh agarwal (professional accountant) (7642 Points)
Replied 05 January 2009

yes i am thinking that such removal is highly illogical because this provision vanishes the intention of this small shareholder directors rules.-----but what we can do-------------?