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Company law > Directors > Flashcards

Directors Flashcards

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1
Q

Who is a director

A

Person appointed by members
To manage the affairs of company
Anyone occupying position of director(by whatever name called)

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2
Q

As fiduciary

A

Take care of money of other person
Act in best interest of company and shareholders

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3
Q

As agent

A

Act in accordance with articles of comapany

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4
Q

Eligibility of directors

A

1.Natural person
2.Be a member (shareholder)

Except; Whole time director or executive director
Chief executive
Representing body corporate Or creditor

3.Any additional criteria specified by articles

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5
Q

Ineligibility of director

A
  1. Not a member
  2. Body corporate
    3 minor
    4 unsound mind
  3. No NTN
  4. Declared as insolvent by court
  5. Convicted by court
  6. Lacks fiduciary behavior declared by court (last 5 yrs)
  7. Disqualified under any provision of the act
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6
Q

Loan/Guarantee to directors

A

(Including spouse/minor child or holding)
1. Approval by resolution of members
2. Approval of commission (for listed)
3. No such restriction for financial institutions

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7
Q

Assignment of office

A

Not allowed

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8
Q

Alternate substitute director is possible if:

A
  1. Absent from pakistan for 90 days or more
  2. Approved by board
  3. Till he returns Pakistan
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9
Q

Non executive director

A

Not from executive management
Does not give his whole working time
Not beneficial owner of company or associated company
No remuneration except meeting fee
Give an outside viewpoint

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10
Q

Protection of non executive director

A

Shall not be liable for act or omission unless

  1. Act or omission was done with his consent
  2. He did not act diligently
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11
Q

Maximum directorship

A

Only in 5 companies except subsidiary

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12
Q

Remuneration

A

For attending meeting: Not to exceed scale approved by company or directors as per articles

For extra service: determine by board or company as per articles

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13
Q

Non cash transaction - conditions

A

-Approval of members in general meeting
-Notice of resolution shall mention particulars including valuation (valuer ki report)
-Restrictions applies on directors of holding company

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14
Q

Cash transaction

A

Must be thru bank

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15
Q

Independent director

A

No relationship with mgmt, company
And related parties

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16
Q

Eligibility criteria for independent director

A
  1. Graduate/professional with 5yrs exp in relevant discipline
  2. 15 years experience

Plus (reasonable time and complete training program for director)

17
Q

Ineligibility of independent director

A
  1. Chief executive if co and its associate co (last 3 yrs)
  2. Employee of co and subsidiary for last yrs
  3. Material business relationship with co for last 3yrs
  4. Director nominated by creditor or Body corp
  5. Cross directorship or significant links
  6. Director served board for 3 consecutive terms
  7. Close relative of company’s promoters, directors or major shareholders
18
Q

Indemnification

A

Agreement to indemnify directors/officers for negligence or breach of duty is void

19
Q

Exception for indemnification

A

Legal proceeding if successful

20
Q

Board meeting frequency

A

Once in each quarter for public company

21
Q

Quorum for board meeting

A

For listed company- 1/3rd or 4 whichever is higher
For unlisted- as in articles

22
Q

Resolution through circulation

A

Validity- approved by majority of directors. Valid and effective as if passed at board meeting.
Rules- Circulated to all directors, along with necessary papers, signed in writing, no revocation, to be noted in minutes of next meeting

23
Q

Record of resolution and meetings (board meetings)

A

Keep record at registered office
Signed by chairman
Copy of minutes distributed to each director within 14 days of meeting
Preserve physically for 10 years
And permanent for electronically

24
Q

Duties of director

A

Act in accordance with articles
Act in best interest if co, emp, shareholders
3. Disclose his interest if any
4. Perform with reasonable care, due diligence

25
Q

Director shall not

A
  1. Obtain undue gain
  2. Involve in conflict of interest
  3. Assign his office
26
Q

Power of director -after obtaining approval

A
  1. Sell or dispose subsidiary of co
  2. Sell/lease or dispose of undertaken or sizeable part (25% or more)
  3. Remit or give extension of payment of debt
27
Q

Power of director without approval

A
  1. To issue shares, debentures and borrow money
  2. To make loan
  3. To make investment
  4. To approve quarterly or annual f/s
  5. To declare interim dividend
  6. To approve bonus for employees
  7. To incur capital expenditure on F.A
  8. To undertake obligation under leasing contract
  9. To authorise director for entering into transaction
  10. To writeoff material debtors, advances
  11. To settle litigation
  12. To takeover or acquiring, controliing stake in an other company
  13. To appoint and remove chief executive
  14. To fill casual vacancy
28
Q

Director vacation - ipso facto ceases to hold office

A
  1. Ineligible
  2. If he is absent from 3 consecutive board meetings without leave
  3. Accepts/obtains loan without approval of members
  4. Office of profit without approval of members
    Any additional ground
29
Q

Removal of director elected

A

If no of votes against resolution less than
Least no of votes obtained by an elected director in last election

30
Q

Removal of appointed director

A

Removed if no of votes less than the formula

No of shares of company x Director appointed at AGM/ director for time being

31
Q

Manner of selection of independent director- responsibilities of institute

A
  1. An institute shall maintain data bank of eligible and willing person
  2. Institute may determine terms and conditions for inclusion of name in data bank
  3. Institute may fix a fee to be paid by individual for inclusion of his name and for companies to provide them access to databank
32
Q

Responsibilities of company - independent director selection

A
  1. Due diligence before appointment
  2. Undertaking that individual meets requirement
33
Q

Responsibilities of individual - indep director

A
  1. Accuracy and updation of information
  2. To ensure compliance with criteria and other requirements

Company law (9 decks)

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