Directors of Company

153. Ineligibility of certain Persons to become Director.—

A person shall not be eligible for appointment as a director of a company, if he:
(a) is a minor;
(b) is of unsound mind;
(c) has applied to be adjudicated as an insolvent and his application is pending
(d) is an undischarged insolvent
(e) has been convicted by a court of law for an offence involving moral turpitude
(f) has been debarred from holding such office under any provision of this Act
(g) is lacking fiduciary behaviour and a declaration to this effect has been made by the Court
under section 212 at any time during the preceding five years
(h) does not hold National Tax Number as per the provisions of Income
Tax Ordinance, 2001 (XLIX of 2001):
Provided that the Commission may grant exemption from the requirement of this clause as may
be notified.
(i) is not a member:
Provided that clause (i) shall not apply in the case of,—
(i) a person representing a member which is not a natural person;
(ii) a whole-time director who is an employee of the company;
(iii) a chief executive; or (iv) a person representing a creditor or other special interests by virtue
of contractual arrangements;
(j) has been declared by a court of competent jurisdiction as defaulter in repayment of loan to a
financial institution;
(k) is engaged in the business of brokerage, or is a spouse of such person or is a sponsor,
director or officer of a corporate brokerage house:
Provided that clauses (j) and (k) shall be applicable only in case of listed companies.

154. Minimum number of Directors of a Company.—

(1) Notwithstanding anything contained in any other law for the time being in force,
(a) a single member company shall have at least one director;
(b) every other private company shall have not less than two directors;
(c) a public company other than a listed company shall have not less than three directors; and
(d) a listed company shall have not less than seven directors:
Provided that public interest companies shall be required to have female representation on
their board as may be specified by the Commission.
(2) Only a natural person shall be a director.
155. Number of Directorships.—
(1) No person shall, after the commencement of this Act, hold office as a director, including as
an alternate director at the same time in more than such number of companies as may be
specified:
Provided that this limit shall not include the directorships in a listed subsidiary.
(2) A person holding the position of director in more than seven companies on the
commencement of this Act shall ensure the compliance of this section within one year of such
commencement.
(3) Any casual vacancy on the board of a listed company shall be filled up by the directors at the
earliest but not later than ninety days from the date, the vacancy occurred.

156. Compliance with the Code of Corporate Governance.—

The Commission may provide for framework to ensure good corporate governance practices,
compliance and matters incidental and axillary for companies or class of companies in a manner
as may be specified.

157. First directors and their term.—

(1) The number of directors and the names of the first directors shall be determined by the
subscribers of the memorandum and their particulars specified under section 197 shall be
submitted along with the documents for the incorporation of the company.
(2) The number of first directors may be increased by appointing additional directors by the
members in a general meeting. The first directors shall hold office until the election of directors
in the first annual general meeting of the company.

158. Retirement of first and subsequent directors.—

(1) All directors of the company:
(a) on the date of first annual general meeting; or
(b) in case of subsequent directors on expiry of term of office of directors mentioned in section
161, shall stand retired from office and the directors so retiring shall continue to perform their
functions until their successors are elected.
(2) The directors so continuing to perform their functions shall take immediate steps to hold the
election of directors and in case of any impediment report such circumstances to the registrar
within forty-five days before the due date of the annual general meeting or extra ordinary
general meeting, as the case may be, in which elections are to be held.
Provided that the holding of annual general meeting or extra ordinary general meeting, as the
case may be, shall not be delayed for more than ninety days from the due date of the meeting
or such extended time as may be allowed by the registrar, for reasons to be recorded, only in
case of exceptional circumstances beyond the control of the directors, or in compliance of any
order of the court.
(3) The registrar, may on expiry of period as provided in sub-section (2), Either:
(a) on its own motion; or (b) on the representation of the members holding not less than one
tenth of the total voting powers in a company having share capital;
or
(c) on the representation of the members holding not less than one tenth of the total members
of the company not having share capital of the company, directs the company to hold annual
general meeting or extra ordinary general meeting for the election of directors on such date
and time as may be specified in the order.
(4) Any officer of the company or any other person who fails to comply with the direction given
under sub-section (3) shall be guilty of an offence liable to a fine of level 2 on the standard
scale.

159. Procedure for election of directors.—

(1) Subject to the provision of section 154, the existing directors of a company shall fix the
number of directors to be elected in the general meeting, not later than thirty-five days before
convening of such meeting and the number of directors so fixed shall not be changed except
with the prior approval of the general meeting in which election is to be held.
(2) The notice of the meeting at which directors are proposed to be elected shall among other
matters, expressly state:
(a) the number of directors fixed under sub-section (1); and
(b) the names of the retiring directors.
(3) Any member who seeks to contest an election to the office of director shall, whether he is a
retiring director or otherwise, file with the company, not later than fourteen days before the
date of the meeting at which elections are to be held, a notice of his intention to offer himself
for election as a director:
Provided that any such person may, at any time before the holding of election, withdraw such
notice.
(4) All notices received by the company in pursuance of sub-section (3)
shall be transmitted to the members not later than seven days before the date of the meeting,
in the same manner as provided under this Act for sending of a notice of general meeting. In
the case of a listed company such notice shall be published in English and Urdu languages at
least in one issue each of a daily newspaper of respective language having wide circulation.
(5) The directors of a company having a share capital shall, unless the number of persons who
offer themselves to be elected is not more than the number of directors fixed under sub-
section (1), be elected by the members of the company in general meeting in the following
manner, namely:
(a) A member shall have such number of votes as is equal to the product of the number of
voting shares or securities held by him and the number of directors to be elected;
(b) a member may give all his votes to a single candidate or divide them between more than
one of the candidates in such manner as he may choose; and
(c) the candidate who gets the highest number of votes shall be declared elected as director
and then the candidate who gets the next highest number of votes shall be so declared and so
on until the total number of directors to be elected has been so elected.
(6) The directors of a company limited by guarantee and not having share capital shall be
elected by members of the company in general meeting in the manner as provided in articles of
association of the company.