Resident director and Directors elected by small share holders with terms and conditions

Resident director

Every company need at last one resident director. According to company act 2013 section 149(3), every company need to have at last one director who had stayed in India for a period not less than 182 days during the current financial year.

Directors elected by small shareholders

According to section 151 of company act  2013, every listed company may have a director elected by small shareholders with the subject to terms and conditions as may be prescribed.

‘Small shareholders’ means persons who are holding shares of not more than the value of twenty thousand rupees or any other sum may be prescribed.

Here, the ‘nominal value’ of shares is relevant. It does not matter how much is the ‘paid-up value’ or ‘market value’ of shares. However, a small shareholder may be a holder of equity shares or preference shares or both.

For example:- Ram holds 4000 equity shares of  Rs.10 each (Rs.5 paid up) in Sam Ltd. However, Ram cannot be considered as a small shareholder since the nominal value of shares held by him (i.e. Rs. 40,000) exceeds Rs.20,000.