Director And Its Eligibility Criteria

Question 1

Section 154

Answer 1

Directors of a Company in Pakistan: Introduction and Eligibility

Definition of a Director [Section 2(25)]
A director is any person occupying the position of a director, regardless of their title. The definition focuses on the function and position, not the specific designation.

Examples
1. Faisal: A senior employee with the title “Human Resource Director” but not appointed to the board of directors. He is not a director.
2. Naveed: A senior employee with the title “General Manager Operations” who is also appointed to the board of directors. He is a director.
3. ABC Limited: A holding company that owns 80% shares of XYZ Limited. ABC Limited cannot be a director of XYZ Limited as it is not a natural person.

Eligibility Criteria
1. Natural Person [Section 154]: Only natural persons can be directors of a company.
2. Not a Variable Representative: A director cannot claim to be a variable representative of the company.
3. Member of the Company: Directors must be members of the company, except where the law specifically allows non-members as directors.
4. Authority: Directors act collectively or by majority, and every director has one vote in decision-making.
5. Fiduciary Relationship: Directors are agents of the company and must make decisions in the best interest of the company and its stakeholders.