Skip to content

CS Executive · Company Law and Practice · Members and Shareholders

Meera Textiles Ltd, a listed company, has 4 directors including one elected by small shareholders. A shareholder claims the company has broken the law by having 'a director elected by small shareholders' and then also appointing other directors at the general meeting. What is the correct view?

There is no breach. Section 151 only permits a listed company to have one director elected by small shareholders. It does not make this the sole route, so the company may also have other directors appointed under the usual provisions.

  1. AIt is a breach, since all directors must be elected by small shareholders
  2. BIt is a breach, since a listed company can have no other directors
  3. CIt is valid only if the director is elected by a Board resolution
  4. DNo breach arises; Section 151 permits one such director, not exclusivelyCorrect

Explanation

Section 151 says a listed company may have one director elected by small shareholders. It creates no requirement that all directors come this way, so other directors can be appointed in the usual manner. The claim of breach has no basis in the text.

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