Skip to content

CS Executive · Company Law and Practice · Members and Shareholders

Meera holds 1,500 equity shares of face value Rs 10 each in Kaveri Foods Ltd, a listed company, bought at a market price of Rs 40 per share. The company is arranging election of a small shareholders' director, and the prescribed sum is the default of Rs 20,000 nominal value. Is Meera a small shareholder?

Yes. Her 1,500 shares of Rs 10 each have a nominal value of Rs 15,000, which is within the Rs 20,000 limit. The section looks at nominal value, so the higher market value of Rs 60,000 does not disqualify her.

  1. ANo, because her market value of Rs 60,000 exceeds Rs 20,000
  2. BYes, because her shares have nominal value of Rs 15,000, which is not more than Rs 20,000Correct
  3. CNo, because she holds more than 1,000 shares
  4. DYes, but only if she holds the shares for over one year

Explanation

Nominal value is 1,500 x Rs 10 = Rs 15,000, which is not more than Rs 20,000, so she qualifies. The market value of Rs 60,000 (1,500 x 40) is irrelevant because the section tests nominal value.

Did you get it right without looking?

One question tells you little. A timed set on Members and Shareholders shows your real accuracy, how long you take and where you lose marks.

Practise Members and ShareholdersFree diagnostic mock

More Members and Shareholders questions