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CS Executive · Company Law and Practice · Members and Shareholders

Rohan, a small shareholder of Sagar Infra Ltd, a listed company, wants to know the source of the procedure for electing the small shareholders' director. Which is the correct position under Section 151?

The manner of election and the terms and conditions are as prescribed. Section 151 only says the director is elected by small shareholders in such manner and on such terms as may be prescribed, leaving the detailed procedure to rules rather than the Board.

  1. AThe manner and terms and conditions are as prescribedCorrect
  2. BThe manner is decided entirely by the Board at its discretion
  3. CThe manner is fixed by the Chairman at the general meeting
  4. DSection 151 itself lays down the full voting procedure in detail

Explanation

Section 151 provides that the director is elected by small shareholders in such manner and with such terms and conditions as may be prescribed. The section does not itself set out the detailed procedure, nor leave it to the Board or Chairman. Hence the prescribed rules govern.

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