Question

State the following statement is True of False:

The secretary of a public limited company is elected by shareholders.

• A. True
• B. False

Answer 1

The correct option is B False

This statements is False because of the following reasons:

(i) The companies Act,1956 defines a joint stock company as" a company having a permanent paid up or normal share capital of fixed amount divided into share also of fixed amount, as held and transferable as stock , of divided and held partly in the other , and formed on the principle of having for its members the holder of those share or that stock and no other persons."

(ii) Since, the management of the company is entrusted to the Board of Directors, only the Board of Directors can appoint a qualified company secretary.

(iii) A company secretary is appointed by the Board of Directors after its incorporation , to assist them in carrying out the administration of the company.

(iv) The shareholder have a voting right to elect a person from among themselves.

(v) A secretary need not be a shareholder.

(vi) He is an outsider not belonging to the constituency of shareholders.

(vii) Hence, the secretary of a public limited company is elected by the Board of Directors.