M&A Critique
M&A Happenings

Appointment of Small Shareholder’s Director Alembic Limited

Facts of the Case

Activist asset manager Unifi Capital, which has under 3% stake country’s oldest pharmaceutical company — the 110-year-old Alembic Limited and is among the top three non-promoter shareholder blocks in Alembic Limited. Unifi Capital with backing of more than one thousand such small shareholders has nominated its vice-president Murali Rajagopalchari as small shareholder director on the Board of Alembic Limited pursuant to Section 151 of Companies Act, 2013.

Legal Provision

Section 151 of the Companies Act, 2013 read with rule 7 of Companies (Appointment of Directors) Rules, 2014.

The small shareholder director is to be appointed under Section 151 of the Companies Act 2013, where only shareholders with a nominal value less than Rs 20,000 can elect through a postal ballot.

The section and Rule quoted above inter alia stipulate that the small shareholder director will have a three-year tenure, shall conform with the requirements under Section 149(6) (for Independent Directors), Such Director shall not be liable to retire by rotation, etc.

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Padma Anatharaman