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CS Executive · Company Law and Practice · Members and Shareholders

Zenith Agro Ltd is an unlisted public company with 4,000 members holding small parcels of shares. A group of these members asks the company secretary to arrange for one director to be elected by small shareholders under Section 151 of the Companies Act, 2013. Which statement is correct?

Section 151 applies to a listed company, which may have one director elected by small shareholders. An unlisted public company such as Zenith Agro Ltd is outside its scope, regardless of how many members it has or what its articles say.

  1. AThe provision permits only a listed company to have such a director, so Zenith Agro Ltd, being unlisted, is not coveredCorrect
  2. BAny public company with more than 1,000 members must have such a director
  3. CEvery unlisted public company may have such a director if its articles so provide
  4. DSuch a director can be elected only by shareholders holding nominal value above twenty thousand rupees

Explanation

Section 151 says a listed company may have one director elected by small shareholders. Zenith Agro Ltd is unlisted, so the section does not apply to it. The option based on member count or on articles misreads the section, which depends on listing, not number of members.

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