Directors

Question 1

who is director?

Answer 1

person appointed by members to manage all affairs of the company

Question 2

Director’s role as fiduciary

Answer 2

fiduciary relation established when one party put trust to another party.
take care of another person’s money.
act in best interest of company and shareholders.

Question 3

when director lacks fiduciary behavior?

Answer 3

if he intentionally keeps the company and its members at disadvantage(i.e make profit from a contract with company and doesn’t disclose personal interest)

Question 4

who is agent of company?

Answer 4

Directors, who act in accordance with articles of company.

Question 5

who is eligible to become a director?

Answer 5

natural person, member of comapny

Question 6

where eligibility of director’s additional criteria specified?

Answer 6

director must meet additional criteria specified by articles. i.e holding qualification shares , education, experience requirement in case of banking and insurance company.

Question 7

who cannot become directors of a company?

Answer 7

not a member, body corporate/company, minor, person with unsound mind, not NTN holder, undischarged insolvent or has applied to court but application is pending , convicted by court for an offense involving immorality, lacks fiduciary behavior as declared by court during last 5 yrs, disqualified from holding any office under any provision of ACT.

Question 8

what are additional disqualification for listed companies?

Answer 8

person who declared defaulter of a financial institution by court.
who or his spouse is broker or officer/director of brokerage house.

Question 9

who is broker

Answer 9

person engaged in business of buying and selling securities for himself or on account of others.

Question 10

can any company become director of other company?

Answer 10

No . Company may be subscriber/ member of another company but cannot be a director.

Question 11

Should criteria Only meet at the time of appointment?

Answer 11

criteria is to be met at the time of appointment as well as during tenure of directorship.

Question 12

What if a bankrupt acting as director?

Answer 12

imprisonment 2 years or penalty or both

Question 13

what are exceptions to rule”director must be a member”.

Answer 13

1. wholetime Dr who is EE of Co.
2. Cheif Executive.
3. person representing member who is Govt and Body corporate.
4. person representing creditor or other special interest through contractual arrangements.

Question 14

what are minimum no of DR in Act.

Answer 14

SMC 1
OSMC pvt 2
public Unlisted 3
public Listed 7

Question 15

what are maximum no of DR?

Answer 15

Not specified in act . Directors may decide.

Question 16

who appoint first directors and how long he hold office?

Answer 16

appointed by subscribers of memorandum and hold office till the elections of directors in first AGM.

Question 17

who appoint subsequent director and what is time period ?

Answer 17

elected by members at general meeting and they hold office for three years.(however company limited by guarantee not having share capital may reduce this period through its article).

Question 18

who filled casual vacancy and how long they hold office?

Answer 18

casual vacancy filled by directors and hold office for the remanider term of the director in whose place he is appointed.

Question 19

what’s the requirement of filling casual vacancy if a company is listed company?

Answer 19

to be filled with 90 days of occurence. or
remaining directors are less than minimumm number required by the law/articles.

Question 20

describe the procedure of election of directors with the connection of general meeting of company having share capital.

Answer 20

fix the number of directors to be elected : 35 days before GM
Notice of GM : 21 days before meeting
filing of intentioon to become director: 14 days before GM
candidate list transferred to member: 7 days before GM

Question 21

when poll is conducted?

Answer 21

if the number of candidates exceed number fixed by directors.

Question 22

how many votes each member have?

Answer 22

number of shares* num of directors to be elected.
every member can distribute his votes between diff members in any way he thinks appropriate.
cand getting highest votes shall be elected and the next.

Question 23

procedure for company not having share capital?

Answer 23

directors shall be elected by member in GM in manner as provided by articles.

Question 24

in how many days company file consent of appointed directors to registrar?

Answer 24

comapny shall file consent with 15 days of appointment/nomination

Question 25

when court declare election of directors as invalid?

Answer 25

member holding 10% or more voting power , apply court within 30 days from the date of election and provided that there has been material irregularity in the holding elections and related matter.

Question 26

what if any defect discover in appointment of directors?

Answer 26

such director shall not exercise any right of director from the date eof discovery of defect(until defect is removed). his past acts will remain valid.

Question 27

when person can apply comapny to hold fresh election of directors?(other than listed company?

Answer 27

if person gets required shareholding to become director he may apply and with 30 days of request company shall proceed to hold fresh election, number of directors fixed in preceding election shall not be reduced.

Question 28

fresh election in listed company?

Answer 28

to hold fresh election, shall follow procedures specified by commission.

Question 29

who is ‘ deemed to have been elected director’?

Answer 29

directors nominated by govt/body corporate.
also nominated by creditor because of contractual arrangement.

Question 30

when will director shall cease to hold office(vacation of director)?

Answer 30

after appointment he became subject to any ineligibility criteria,
absent in three consecutive board meeting without seeking leave of absence.
He or any firm in which he is a partner or any company in which he is director:
obtain any loan or guarantee without fulfilling conditions of act.
accept office of profit without approval of members

Question 31

how will director removed?

Answer 31

only by passing a resolution in general meeting through votin

Question 32

calculation of votes at the time of removal of directors?

Answer 32

total votes of member=number of sharesof member* num of directors appointed at AGM

Question 33

when director cannot be removed?

Answer 33

if votes against the resolution is equal or exceed the least num of votes obtained by elected director in last election.

Question 34

how to remove appointed director?

Answer 34

if votes against resolutionequal or exceed following number
total number of shares of comapny* num of DR appointed at AGM/num of DR for the time being

Question 35

what are the duties of directors?

Answer 35

act in accordance with the articles
act in the best interest of comapny, employee shareholder and its community
perform his duties with reasonable care and due diligence and shal exercise independent judgment
disclose if he has any interest in a contract with company

Question 36

what acts director should avoid?

Answer 36

obtain undue gain for himself or his relative(if obtain he shall be liable to pay amount equal to gain of company)
involve in conflict of interest with company.
assign his office to any other person such assignment shall be void

Question 37

how we ratified breach negligence or any default by director?

Answer 37

through special resolution.
commission may specify restrictions.

Question 38

which powers needs no approval in GM

Answer 38

powers exercised by directors only after passing resolution in board meeting:
to issue share/debentures/other redeemable capital or to borrow money
to appoint an dremove chielf executive etc

answer in book :)

Question 39

which powers exercise only by approval in general meeting?

Answer 39

sell or disposed subsidiary of comapny,sell lease or otherwise dispose of the undertakings,or sizeable part of it unless its the company’s business.
remit, give extention of time for repayment of debt against specified person,

Question 40

when resolution lapse?

Answer 40

if not implemented within 1 year resolution of general meeting shal lapse.

Question 41

frequency of meeting for public company?

Answer 41

once in each quarter.

Question 42

Quorum for listed company?

Answer 42

1/3rd or 4th whichever is higher

Question 43

quorum for unlisted company?

Answer 43

as in articles

Question 44

what if casual vacancy arise and there are not enough directors to make qourum?

Answer 44

remaining directors shall be treated as quorum for this limited purpose.

Question 45

in which meeting resolution through circulation is noted?

Answer 45

in next meeting

Question 46

rules of resolution through circulation

Answer 46

circulated to all directors alongwith necessary papers.
signed in writing by all director or committee of director.
cannot revoke once signed.
noted in minutes of next meeting.

Question 47

who need copy of minutes?

Answer 47

copy of minutes shall be sent to every director within 14 day of the meeting

Question 48

should company indemnify director?

Answer 48

agreement to indemnify director/officers for negligence o

Question 49

when directors indemnified for legal cases?

Answer 49

they will get indeminification only if legal case is successful.

Question 50

can company give loan to its directors(including directors of holding company)?

Answer 50

only if loan has been approved by resolution of members,
for listed company , approval of commision also required

Question 51

exception of restriction on loan?

Answer 51

financial institution (in ordinary course of business)

Question 52

in what circumstances director can appoint alternate director?

Answer 52

if he will be absent from pakistan for 90 days or more
appointment is approved by BOD