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CS Executive · Company Law and Practice · Members and Shareholders

Zenith Textiles Ltd, a listed company, has many retail investors. Under the Companies Act, 2013, which statement about a director elected by small shareholders is correct?

A listed company may have one director elected by small shareholders. Section 151 is enabling rather than compulsory, applies only to listed companies, and permits a single such director, with the manner and terms of election as prescribed.

  1. AEvery public company, listed or not, must have one such director
  2. BA listed company may have one director elected by small shareholdersCorrect
  3. CA listed company must have at least two such directors
  4. DOnly an unlisted public company may have such a director

Explanation

Section 151 says a listed company may have one director elected by small shareholders, in the prescribed manner and on prescribed terms. It is enabling, not mandatory, and limited to one director and to listed companies. The other options misstate who may have such a director or how many.

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