M Ltd. is a listed entity having a paid up equity share capital of ₹100 crores. The company has 1500 small shareholders. It received a notice from 1200 small shareholders proposing Mr. X, a small shareholder as a candida

Section 151 of the Companies Act, 2013 read with the Rules made thereunder provides that a listed company, may upon notice of not less than one thousand small shareholders or one-tenth of the total number of such shareholders, whichever is lower, have a small shareholders' director elected by the small shareholders. However, the use of "may" in both the Section and the Rules gives an impression that it is the prerogative of the Company with no obligation on the company to process the notice received from the small shareholders for appointment of a director representing small shareholders. In the instant case, M Ltd. has sufficient number of independent directors who are taking adequate care of the interests of all shareholders including small shareholders. Under the circumstances, the board of M Ltd. may reject the appointment of Mr. X as small shareholder director by explaining the circumstances to the shareholders and the rationale for taking such decision.