legalYesterday In India,CEO Rahul Yadav was fired by board of directors of Housing.com (A startup property searching website, founded by Rahul Yadav, valued at nearly 200 million USD).
He holds nearly 8% of shares of this company.
My question is, how can they fire him since he has a major shares in the company?
Don’t they need his permission before firing him?
Firing a CEO is a decision of the board. If the majority agrees the CEO can be asked to abdicate. Shares do not matter unless he has more than half of them, which will make him the owner and then he will become immune and will have a power to veto any decision.
Holding the most shares doesn’t matter. That merely makes him a major shareholder.
To get his way all the time, he’d need half of the shares (plus one).
NO,
A great example is Bill Gates and Microsoft Corp. As majority owner and CEO, he stepped down, came back, the retired once again. All in which securing money through puts/holds options. The board did not have to allow him back to acting CEO or even interim CEO. Even as majority holder, if they deem him unfit, which may be rare considering the CEO is often the reason the board members have a job with the company; they may vote to terminate in professional manner of resignation with severance, or if there is punishable accusations or convictions that will put share holders at risk.
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