Presentation On Power And Duties Of Directors Presented By

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Transcript Presentation On Power And Duties Of Directors Presented By

PRESENTATION ON
POWER AND DUTIES OF DIRECTORS
PRESENTED BY
MUHAMMAD NAEEM KHAN
JOINT REGISTRAR
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
COMPANY REGISTRATION OFFICE, KARACHI
The Law recognizes a company, as a “legal person”
which in its own rights, is capable of owning
property, making contracts, conducting litigations
and also responsible for doing wrongs. When we
look at these matters from practical angle and at the
way in which this artificial legal person functions; its
corporate will is manifested, its decisions taken and
its acts performed, we see that a company cannot do
any thing at all except through the human beings.
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The business of the Company is
managed by the Directors who may pay
all expenses incurred in promoting and
registering the Company and may
exercise all such powers of the company
as are not by the Ordinance, or by the
articles, or by a special resolution,
required to be exercise by the company
in general meeting.
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Directors act as fiduciaries to the company.
Fiduciary duties of directors fall under two general
categories;
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(i) duty of care; and
(ii) duty of loyalty.
DUTY OF CARE
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Under the duty of care, a director’s responsibility is to
perform his/her duties with the diligence of a reasonable
person in similar circumstances.
DUTY OF LOYALTY
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Under the duty of loyalty, a director’s fiduciary duty is to
act in good faith for the best interests of the company.
Directors’ duties arise from the following:
Law/ Rules.
 The Memorandum and Articles of
Association of the company.
 Service agreements specifically entered
between the director and the company.
 Resolutions passed at members’ or
directors’ meetings.
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Allotment of shares (S. 73)
Issuance of shares certificates to the shareholders (S.74 to 75)
Transfer of shares (S. 76 to 81)
Registration of Charges (S. 121 to 136)
Maintenance of Registered Office Address (S. 143)
Holding of general meetings (S. 157 to 159)
Maintenance of Minute’s Book (S. 173)
Election of Directors (S. 178 to 180)
Appointment of Chief Executive (S. 198 to 203)
Appointment of Company Secretary (where applicable) (S. 204A)
Maintenance of books of accounts (S.230)
Preparation, audit and presentation of accounts in the AGM (S. 233)
Preparation of quarterly accounts by a listed company (S. 245)
Appointment of first Auditor (S. 252 to 254)
Appointment of Legal Adviser (Companies Appointment of Legal
Advisor’s Act, 1974)
The directors of a company may exercise the following
powers on behalf of the company, and shall do so by
means of a resolution passed at their meeting, namely:
› to make calls on shareholders in respect of moneys
unpaid on their shares;
› to issue shares;
› to issue debentures or 1[any instrument in the nature of
redeemable capital];
› to borrow moneys otherwise than on debentures;
› to invest the funds of the company;
› to make loans;
› to authorize a director to enter into any contract
between the company and associated undertaking for
making sale, purchase or supply of goods or rendering
services with the company;
› to approve annual or half-yearly or other periodical
accounts as are required to be circulated to the
members;
› to approve bonus to employees;
› to incur capital expenditure on any single item or dispose
of a fixed asset in accordance with the limits as
prescribed by the Commission from time to time;
› to
undertake obligations under
exceeding one million rupees;
leasing
contracts
› to declare interim dividend; and
› having regard to such amount as may be determined to
be material (as construed in Generally
Accounting Principles) by the Board,-
Accepted
(i) to write off bad debts, advances and receivables;
(ii) to write off inventories and other assets of the company;
and
(iii) to determine the terms of and the circumstances in
which a law suit may be compromised and a claim or right
in favor of a company may be released, extinguished or
relinquished.]
 The company through its Article of association
may authorize/ restrict the duties of directors
subject to the condition that these restrictions/
authorization are not contrary to the Law e.g.
law requires a board resolution for capital
expenditure and disposal of fixed assets at Rs 1
million and Rs 1 lac respectively. However, the
company through its articles can further restrict
this limit.
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Director shall cause to maintain following registers/ books as
provided under the Law.
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Register of transfer of shares (section 76);
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Register of buy-backed shares by a company (section 95A);
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Register of mortgages, charges etc. (section 135);
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Register of members and index thereof (section 147);
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Register of debenture-holders (section 149);
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Maintenance of Minute’s Book (S. 173)
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Register of directors and other officers (section 205);
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Register of contracts, arrangements and appointments in which
directors etc are interested (Section 219);
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Register of directors' shareholdings and debentures (section 220);
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Register of deposits(Rule 15/1 of deposit rules);
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