Chapter 4 Flashcards
Chief Executive - Definition
Chief executive In relation to a company means an individual who, subject to the control and
directions of the directors, is entrusted with the whole, or substantially the whole, of the
powers of management of the affairs of the company, and includes a director or any other
person occupying the position of a chief executive, by whatever name called, and whether
under a contract of service or otherwise.
Role and responsiilities of chief executive
If not already a director, deemed to be a director.
Individuals ineligible to become directors are also ineligible to be Chief Executives.
Reports to the board and cannot exceed the authority granted by the Board of Directors (BOD).
First Chief Executive
Determined by the subscribers of the Memorandum of Association (MOA).
Specified particulars must be submitted with incorporation documents.
Holds office until the 1st Annual General Meeting (AGM) or a shorter period if fixed by directors.
May be removed or resign before the 1st AGM.
Government may nominate the Chief Executive for a public sector company.
Chief Executive and Competing Business
Chief Executive, his spouse, and minor children cannot engage in a business competing with the company or its subsidiary.
Must disclose details of any competing business if engaged in one at the time of appointment in a public company.
Subsequent Chief Executives
Appointed by directors within 14 days of their election or in case of a casual vacancy.
Term is up to 3 years from the date of appointment.
Retiring Chief Executive can be re-appointed.
Retiring Chief Executive continues to perform duties until a successor is appointed, unless:
Non-appointment is due to his fault, or
His office is expressly terminated.
Federal Government can nominate and appoint Chief Executives where the majority of directors are Federal nominees.
Terms of Appointment and Ineligibilities
Terms of appointment determined by directors or in general meeting as per Articles of Association (AOA).
Terms for a government-nominated Chief Executive determined by the Federal Government.
An individual ineligible to be a director is also ineligible to be a Chief Executive.
Removal of Chief Executive
Can be removed by a 3/4th majority of total directors in their meeting.
Can be removed by a special resolution of members.
Government or authorized person can remove a Chief Executive if more than 75% of voting rights are held by the Government.
Chairman (for Listed Companies)
Appointed from non-executive directors within 14 days from the election of directors.
Responsible for leadership of the board and ensuring effective board performance.
Must review board performance in annual financial statements.
Holds office for 3 years unless resigns, becomes ineligible, disqualified, or removed by directors.
Board must define roles and responsibilities of Chairman and Chief Executive.
SECP may specify if Chairman and Chief Executive should be different individuals.
Company Secretary (for Public Companies)
Appointed to perform secretarial duties and other related tasks.
Must possess specified qualifications and experience.
Responsible for advising the board on compliance with corporate laws and maintaining relevant records and registers.
Share Registrar (for Listed Companies)
Independent share registrars must be appointed to handle share transfers and other obligations.
Name of the share registrar must be mentioned in the notice of meetings.
All share transfer applications should be directed to the share registrar, not the company.
Sole Purchase, Sale or Distribution Agent
No company can appoint such an agent without SECP approval.
Exception: Companies incorporated or individuals residing outside Pakistan do not need SECP approval unless they conduct a major portion of their business in Pakistan.
