Company Law

Chief executive
Appointment of first chief executive (section 198)
Every company other than the company managed by a managing agent shall have a chief
executive appointed in the manner provide in this section and 199
The directors of every company shall as from the date from which it commences business or as
from a date not later than the 15th day after the date of incorporation whichever is earlier appoint
any individual to be the chief executive of the company.
The first chief executive appointed as aforesaid shall unless the earlier resigns or otherwise ceases
to hold office up to the first annual general meeting of the company of if a shorter period is fixed
by the directors at the time of his appointment for such period.
Appointment of subsequent chief executive (section 199)
With 14 days from the date of elections of director under sec 178 or the office of chief executive
falling vacant as the case may be directors of the company shall appoint any person including an
elected director to be the chief executive but such appointment shall not be for a period exceeding
three years from the date of appointment.
On the expiry of his term of office under sec 198 or sub sec a chief executive shall be eligible for
reappointment
The chief executive retiring under sec 198 or this sec shall continue to perform his functions until
his successor is appointed unless not appointment of his successor is due to any fault of his part
or his office is expressly terminated
Terms of appointment of chief executive and filling up of causal vacancy (section 200)
The terms and conditions of appointment of chief executive shall be determined by the directors
or the company in general meeting in accordance with the provision in the company articles
The chief executive shall if he is not already a director of the company be deemed to be its
director and be entitled to all the rights and privileges and subject all the liabilities of that office.
Restriction of appointment of chief executive (section 201)
No person who is ineligible to became a director of a company under section 187 shall be
appointed or continue as a chief executive of the company.
Removal of chief executive (section 202)
The directors of the company by the resolution passed by not less than the of total number of
directors for the time being or the company by a special resolution may remove a chief executive
before the expiration of his term of office not withstanding anything contained in the articles or in
any agreement between the company and such a chief executive.
Chief executive not engaged in business competing with companies business (section 203)

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Chief executive of a public company shall not directly or indirectly engaged in any business
which is of same nature as and directly compete with the business carried on by the company of
which he is the chief executive of subsidiary of such company.
o A business shall be deemed to be carried on indirectly by chief executive if the same as
carried on by his spouse of any of his minor children
o Every person who is appointed as chief executive of a public company shall forth with on
such appointment disclose to the company in writing the nature of such business and his
interest there in.
Penalty (section 204)
Whoever contravenes of fails to comply with any of the provision of sec 198 to 203 or is a partly
to the contravention of the said provisions shall be liable to fine which may extent to 10,000
rupees and also be debarred by the authority which imposing the fine from became a director or
chief executive of a company for a period not exceeding three years.

Commencement of Business
The following companies can commence business exercise borrowing powers and make a binding
contracts soon after incorporation
o Private company
o Company limited by guarantee and not having share capital
Means that these companies are not required to obtained certificate of commencement of business
from the registrar to commence their business
A public company and a company limited by guarantee and having share capital cannot
commence business and exercise borrowing powers until the further requirements have been
complied with which are as under
o In case of issue of prospects permission from the stock exchange has been obtained for
the shares and debentures
o In the case of company which has not issues a prospects statement in lieu of prospects
has been filled with the registrar
o Minimum subscription has be allotted in case
o Every director of the company has paid full amount of share taken or contracted to been
taken by him or for which he is liable to pay in cash
o A declaration in the prescribed form duly verified by chief executive or one director and
the secretary has been filled with filed with registrar that all the conditions in this respect
have been complied with and the registrar has issued certificate of commencement of
business
The registrar shall issue a certificate of commencement of business after satisfying himself that
all the requirement in this respect have been complied with and that certificate shall be conclusive
evidence that the company is entitled to commence business
Any contract made by company before the date of commencement of business shall be
provisional only and does not became binding on company until it is untitled to commence.
Simultaneously offer for subscription or allotment any shares in debentures permissible penalty of
1000 per day
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Company Law

Meetings and proceedings

Statutory meetings (section 157)
Every public company limited by shares and every public company limited by guarantee and
having share capital are required to hold a general meeting of members called statutory meeting.
Statutory meetings are required to be held within a period of three to six minutes from the date of
certificate of commencement of business.
If a private company converted into public company within one year of its incorporation then
statutory meeting shall be held within three to six months of such conversion
The directors shall forward statutory meeting report to every member and 5 copies to registrar at
least 21 days before meeting. Statutory report shall be certified by chief executive and 2 directors
Contents of Statutory report
Total number of shares allotted in cash and otherwise then in cash and consideration there off.
Total cash received against share allotted
An abstract of receipt and payment account up to date with 7 days of statutory report stating
o Receipt from shares, debenture and other sources
o Payment from the above receipts
o Balance in hand
o Preliminary expenses showing separately any commission or discount on issue of share
These above points shall be certified by the Auditors as to correctness of such allotment receipts
and payments
Names, addresses and occupations of directors, chief executives, secretary, Auditors, legal
Advisers and any change since incorporation
Particulars of any contract if its modification is required to be approved in the meeting along
with particulars of the proposed modification.
Underwriting contracts if any fulfilled and unfulfilled with reasons
Particulars of commission or brokerage for issue of share to any director, chief executive,
secretary, other officers or to the private company of which any of such person is a director
Brief statement of companys affair since incorporation and the business plan including any
change or proposed change affecting the share holder interest and business prospects of the
company
Annual general meeting (AGM) (section 158)
First AGM shall be held within 18 months from the date of incorporation of a company
Subsequent AGM shall be held:
o At least once in every calendar year
o Within 4 months from the close of financial years
o Within 15 months from the first AGM
Ordinary Business to be transacted at AGM are
o Consideration of the accounts
o Considerations of directors report and auditors report
o Declaration of dividend
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o Appointment of auditors and fixations of their remuneration
o Election of directors
Matters other than ordinary are special matters
AGM of a listed company is required to be held in the town of registered office except with the
approval of SECP for any special reason.
Notice of AGM shall be sent to the member at least 21 before the date of AGM. In case of a listed
company such notice shall be published in one English and one Urdu daily newspapers having
circulation in the province of stock exchange.
Extension of time to hold first AGM is not allowed
Extension in the period for holding subsequent AGM or lying accounts therein
o Extension of time to hold subsequent AGM or lying accounts therein may be allowed for
a maximum period of 30 days for any special reasons by:
SECP in the case of listed company, and
The registrar in the case of other company
o Application for extension of time is required to be submitted at least 30 days before the
last days of AGM. An application submitted within 30 days may be accepted by SECP or
the Registrar for any special reason to be recorded in writing
o Application for extension shall state
Registration number, name and address of company
Date of the last AGM and the date up to which the accounts are required to be
laid therein
Reasons and justification for the extension applied for
When the delay is due to non-completion of account or audit, the state of account
with reason for non-completion of accounts or audit along with the auditor
certificate as to the state of its accounts, reason for delay in completion of audit
and minimum time required for the purpose
Shall be accompanied by a copy of the last audited accounts and a challan fee of
RS.15000 in case of public company and RS.5000 in case of a private company.
Extra-ordinary general meeting (EGM) (section 159)
Directors may call EGM for any matter at their own discretion or on requisition of the members
having 10% or more voting power. The said requisition stating the objects of meeting shall be
signed and deposited at the registered office with relevant document any.
If directors do not proceed to call EGM within 21 days then the members who filed the
requisition may hold EGM within 3 months from the date of deposit of the requisition in the same
manner, as nearly as possible, as a meeting called by the directors.
In this case, reasonable expenses to convene the meeting by the requisitionists shall be repaid by
the company and the same shall be deducted from the fee or remuneration of such directors who
were in default.
Notice of EGM shall be sent to the members at least 21 days before the date of EGM. In case of
listed company such notice shall also be published in one English and Urdu newspaper having
circulation in the province of stock exchange.
Provisions as to meeting and votes (section 160)

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Notice to general meeting: notice specifying the place, date and time with agenda of the general
meeting shall be given to:
o Every member
o Next to Kin if his interest is known to the company
o Auditors of the company
Notice shall be given personally or by post to the registered addresses of the above person. However
accidental omission shall not invalidate the meeting.
Ordinary matters to be transacted during the general meeting are
o Consideration of accounts
o Consideration of directors report and auditors report
o Declaration of dividend
o Appointment of auditors and fixation of their remuneration
o Election of directors
Matters other than ordinary are special matters.
Quorum of a general meeting
Company
Public listed company

Quorum
At least 10 members who represent not less than 25% voting
power on their own account or as proxy
Other company
At least 2 members who represent not less than 25 % voting
power on their own account or as proxy
Article of association may provide for a larger Quorum in the above cases
In the quorum is not present within 30 minutes then
o If the meeting is called upon requisition of the members then meeting shall be dissolved
o If the meeting is called by the directors then the meeting shall stand adjourned to the
same day in the next week at the same time and place and if the adjourned meeting a
quorum is not present within 30 minutes then 2 members shall be a quorum unless
articles provide otherwise
o If the quorum is not present even in an adjourned meeting then the SECP may allow
quorum as one member
Chairman of general meeting
Chairman of BOD shall be the chairman of general meeting
If the chairman is not present within 15 minutes or unwilling to act as a chairman or if there is no
such chairman of BOD then one of the director present at the general meeting may elected as
chairman or alternately one of the member shall be choosen as a chairman
Voting power
In case of company limited by guarantee not having share capital every member shall have one
vote.
In case of company having share capital every member shall have voting power in proposition to
the paid up value of share and security. Any member having voting power shall not be debarred
from costing his vote and such restriction if any in the article shall be void.
Votes on pole may be given personally or by proxy.
Notice of resolution by the company (section 164)
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Draft resolution by the company: the company shall sent copies of draft resolution to the
members with notice of general meeting other than routine and procedural matter.
Draft resolution by the members: if the meeting is requisition by the members, the
requisitionist shall also submit draft resolution along with the requisition.
If the meeting is called by the directors then the members having 10% or more voting power may
give notice of a resolution which they propose to be considered at general meeting.
In case of they shall submit draft resolution to the company at least 15 days before the meeting.
The company shall circulate such draft resolution immediately to the members.
Circumstances to which proceeding of a general meeting may be declared invalid (section 160A)
Members having at least 10% may be file petition to the court within 3o days of the general
meeting of they have reasons to believe that
o There is any material defect or omission in the notice or
o Members were prevented from using their right effectively
The court is satisfied may declare such proceedings invalid in full or part and direct to hold a
fresh general meeting
Proxies (section 161)
Every member is entitled to appoint a proxy who has all the rights of original member including
the right of speaking and voting at general meeting. A proxy must be a member unless otherwise
provided by the articles. It means that if nothing is mentioned in the Articles then a non-member
cannot be appointed as a proxy.
Restriction on proxy
Member of a company not having share capital cannot appoint as a proxy
A member cannot appoint more than one proxy for one meeting. In case of more proxy forms are
deposited then all proxy forms shall stand cancelled.
Every notice of a general meeting shall state legal provision in respect of proxy and be
accompanied by a proxy form which is required to be submitted at least 48 hours before the
meeting.
A proxy or his proxy is entitled to
o Demand a poll
o Abstain from voting for a particular matter or not to exercise his full voting rights on any
poll

Government or corporate representation at meeting of a company (section 162 & 163)

The following may account any of its officials or any others persons as its representative to the general
meetings of the company and such person shall be entitled to excerise all powers As if he were an
individual
o
o

Federal or provisional government, if it is a member of the company

A company which is a creditor as per contractual arrangement

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o

A company which is a member. Such appointment shall be decided by a resolution of the

directors of the company which is a member.

Demand for poll (section 167)

On or before declration of voting in a general meeting by show of hands the chairman may order
a poll at his own motion or poll may be demanded by the members/ proxies as under
o In case of a public company poll may be demanded by any number of members having at
least 10% voting power or by 5 members
o In case of private company poll may be demanded by
One members where up to 7 members are present in the general meeting
One member having at least 10% voting power or two members where more than
7 members are present in the general meeting.
Members/proxies may withdraw demand poll at any time
Time for polling (section 168)
Poll shall be taken immediately for the matters of:
o Election of chairman of the general meeting and
o Adjournment of the general meeting
For any other matter, time and manner for the poll shall be decided by the chairman not later than
14 days
Date of decision of a particular matter shall be deemed to be the date when the poll is taken
Resolution at adjourned meeting (section 169)
If any member is resolved at any adjourned meeting of directors, members or creditors then the date of
resolution shall be the date of adjourned meeting.
Powers of SECP to call meetings (section 170 and 171)
If default is made in holding
Statutory meeting
AGM
EGM on the requisition of members
Then SECP may call such meeting or may give direction to the directors to call meeting. This action may
be taken by SECP on its own motion or on an application by any member or director
Any meeting conduct in accordance with the direction given by the SECP shall be deemed a duly
convened meeting and all expenses of the meeting shall be paid by the company unless the SECP directs
the same to be recovered from any officer of the company.
Filling of resolution (section 172)
A printed or typed copy of every special resolution duly signed by the chief executive or secretary of the
company is required to be filed within 15 days to the Registrar.
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Every article even issued after passing special resolution, must accompany a copy of special resolution. A
copy of special resolution shall be given to a member at his request on payment of an amount not
exceeding prescribed by the company.
Minutes of proceeding of general meetings and directors (section 173)
Minutes of the meetings
Minutes book are required to be maintained and shall be kept at the Registered office in respect o
general meeting and meetings of directors and committee of directors and the names of those
participating in such meetings.
Minutes shall be signed by chairman of the meeting or by the chairman of the next succeeding
meetings
A copy of minutes of BOD meeting shall be formulated to every director within 14 days of the
meeting.
Inception and certified copy of minutes
Minutes book of general meeting shall be open to inspection by the members without any charne
during business hours subject to restriction imposed by articles or general meeting but at least 2
hours each day excluding a public holiday.
A member may apply after 7 days of the general meeting for the certified copy of minutes and the
company shall provide the same within 7 days of the application with a charge not exceeding the
amount prescribed by company.

Instructor: Sir Zain-ul-Abdin

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