Section 151- Small shareholder Director

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Section 151- Small shareholder Director

Chapter X of Companies Act, 2013

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Requirement of small shareholders director

'Small shareholders' means a shareholder holding shares of nominal value of Rs.20,000 or less ’ Both Equity and preference shareholder who is satisfying above requirement will considered. Every listed company MAY have one director.

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Procedure for appointment

Company may appoint small shareholder on its own or on application by small shareholder A notice in writing is given by at least 1000 small shareholders or 1/10th of small shareholders , whichever is less. Notice should be given at least before 14 days before general meeting. Notice should contain the name, address, number of shares held of person proposed to be appointed as small shareholder.

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Procedure for appointment

Notice should be signed by the nominee stating A. his director identification number (DIN), B. that he is not disqualified to become director, C. his consent to act as director to company. If the proposer does not hold any shares, details of shares held need not be mentioned in the notice. A Listed public companies shall elect the small shareholders nominee through a postal ballot.

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Other restrictions

It can be appointed for maximum of 3 years and he need not retire by rotation. A person shall not hold office as small shareholders' director in more than two companies at the same time. Person who is small shareholder director in one company cannot be appointed as small shareholder director in second company, if it is in competition or conflict with business.

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Other restrictions

It shall not be appointed or associated in any other capacity for a period of 3 years from the date of cessation. Small shareholders' director is not eligible for appointment as whole time director or managing director. Such director shall be considered as an independent director subject to his giving a declaration of his independence as specified.

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Other restrictions

person appointed as small shareholders' director shall vacate the office if a. Disqualifications as per S.164; b. Vacantion under section 167; c. the director ceases to meet the criteria of independence as provided in section 149(6)

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Removal of small shareholders director

Only by ordinary resolution passed in the general meeting after compliance of the procedural requirements of section 169.