Mr. Solid, a young professional of 29 years, has stayed in India for 150 days in the previous financial year. He does not hold any shares in Happy Retails Limited, which is a quoted (listed) company. Small shareholders h

Rule 7 of Companies (Appointment and Qualification of Directors) Rules, 2014 contains provisions for appointment and qualification of small shareholders' directors. Sub-rule (2) allows a person who is not a shareholder to become shareholders' director. Pursuant to sub-rule (5), the appointment of small shareholders' director shall be subject to the provisions of section 152 except that - such director shall not be liable to retire by rotation; such director's tenure as small shareholders' director shall not exceed a period of three consecutive years; and on the expiry of the tenure, such director shall not be eligible for re-appointment. Thus, in accordance with sub-rule (2) of rule 7, Mr. Solid who does not hold any shares in Happy Retails limited can be proposed to be appointed as a small shareholder director. He shall not be liable to retire by rotation but he cannot be appointed for 5 years. Mr. Solid can be appointed as a small shareholders' director only for 3 years.