Directors

 A director is an officer of the company concerned with the management of the affairs of
the company on behalf of the members.
 He acts as an agent and representative of the company.
 Only a natural person can become a director of a company

Minimum Number of Directors:

Following table depicts minimum number of Directors:

Private company can be divided into two:

I. Single member company requires minimum one director

II. Multi Member Company (more than one member) requires having minimum two directors.

Public Company can be divided into two

I. Non-listed Company requires minimum three directors.

II. Listed Company requires minimum seven directors.

Kinds of Directors

1. Elected Director
First Directors are elected by the subscriber members of the company. Then Subsequent directors are
elected in the Annual General Meeting by the members of the company. First Director will hold the
office till the election of directors in the first annual general meeting of the company whereas the term
of Office of a subsequent director is three years

2. Nominated Director:
These are the Directors who are not elected rather nominated by other persons or body. Conditions
related to law regarding election, terms of office, retirement and removal of directors do not apply to
nominated directors.
Directors may be nominated by the government, Creditors, Company making investment in company
and foreign investor

3. Ex-Officio Director:
Chief Executive may or may not be appointed out of directors. A Chief Executive appointed not already a
director, by virtue of his designation as Chief Executive will automatically be considered as Director of
the company. This type of Director is called as Ex-Officio Director. He will be director till the time he is on
post of CEO.

4. Sole Director:
Single member company (SMC) has only one member who is the director of the company and is known
as Sole Director. If SMC has more than one director then he will be called as Member Director

5. Nominee Director:
The sole member of the SMC, is required to nominate a person as nominee director to act as director in
case of his death.

6. Alternate Nominee Director:

It is also the requirement of law in the case of SMC that the director must nominate an Alternate
Nominee Director. In case of death of the Sole director, if Nominee Director is not available then
Alternate Nominee director will manage the company.

7. Executive Director:
A director may be a full time working director, namely, managing or whole time director covered by a
service contract who is incharge of day-to-day conduct of affairs of company.

8. Non Executive Director:

Company may also have non-executive directors who do not have anything to do with the day-to-day
management of the company but attend board meetings.

9. Independent Director
Definition of Independent Director is now wider and includes a Non Executive Director (NED),
who:

 Does not have any material pecuniary relationships or transactions with the company's
associates.
 Is not related to promoters or persons occupying management positions at the Board level of a
level below.
  Has not been a company executive in past 3 years.
 Is not/was not in last 3 years a partner or executive of the statutory audit/internal
audit/consulting firm.
 Is not a material suppliers, service provider, customer, lessor or lessee of the company
 Does not own 2% or more of voting shares.

The test of independence principally emanates from the fact whether such person can be reasonably
perceived as being able to exercise independent business judgment without being subservient to any
form of conflict of interest.

As per Code of Governance 2012, the board of directors of each listed company shall have at least one
and preferably one third of the total members of the board as independent directors

Director should be a Natural Person:

Director can only be a natural (physical) person. Company is also a person but an artificial person so it
cannot be director of the company but can be a member of the company.

Qualifications of Director of a Company

As per section 187 of the companies Ordinance 1984, any Natural person is eligible to become a director
of a company except the following persons

1. A minor
2. A person of unsound mind
3. A person who has applied in a court of law for his insolvency and whose application is still
pending.
4. A person who is a bankrupt.
5. A person who is an un-discharged insolvent
6. A person who has been declared a guilty of an offence of moral turpitude by a court of law
7. A person who has been debarred from holding an office of the director under any provision of
the Companies Ordinance, 1984.
8. A person who has been declared by the Court as having lack of fiduciary behavior at any time
during the last five years.
9. A person who is not a member of the company. However, the following persons may become
directors of a company without being a member of the company:

I. A person nominated by the Government

II. A person nominated by an institution or an authority
III. A person nominated by the creditors
IV. A whole time director who is an employee of the company
V. A chief executive of the company
 10. A person who has been declared by the Court as defaulter in repayment of a loan amounting to
rupees one million or more
11. A person who is:

I. Engaged in the business of brokerage;

II. A spouse of such person
III. A sponsor, director or officer of a corporate brokerage house

This prohibition shall not apply where the company is a stock exchange.

Directors' Remuneration
The director’s remuneration is fixed by the appointing authority, ie, the directors or the members in the
general meeting of the company according to the provisions of the articles of association. Remuneration
for performing extra services, such as the holding of the office of the Chairman, shall also be fixed by
directors or the members which cannot increase the limit provided in the AOA.

Powers of Directors
The directors of a company manage the company. All the directors collectively are called as Board of
Directors. The routine business of the company is managed by its directors. Directors have powers to
pay expenses incurred on running the business etc. Mostly for routine management decisions they do
not need any board resolution. But there are few issues for which board resolution to be passed like
issuance of shares etc.

Directors' Meetings
The meeting of the directors of a company is called directors' meeting. A public company must have at
least four (4) Board Meetings in a year. The directors shall meet at least once in each quarter of a year.
The law is silent as to the minimum number of such meetings to be held by a private company. For
private companies it may be decided in AOA.
 Directors
 A director is an officer of the company concerned with the management of the affairs of
the company on behalf of the members.
 He acts as an agent and representative of the company.
 Only a natural person can become a director of a company

Minimum Number of Directors:

Following table depicts minimum number of Directors:

Private company can be divided into two:

III. Single member company requires minimum one director

IV. Multi Member Company (more than one member) requires having minimum two directors.

Public Company can be divided into two

III. Non-listed Company requires minimum three directors.

IV. Listed Company requires minimum seven directors.

Kinds of Directors

10.Elected Director
First Directors are elected by the subscriber members of the company. Then Subsequent directors are
elected in the Annual General Meeting by the members of the company. First Director will hold the
office till the election of directors in the first annual general meeting of the company whereas the term
of Office of a subsequent director is three years

11.Nominated Director:
These are the Directors who are not elected rather nominated by other persons or body. Conditions
related to law regarding election, terms of office, retirement and removal of directors do not apply to
nominated directors.
Directors may be nominated by the government, Creditors, Company making investment in company
and foreign investor

12.Ex-Officio Director:
Chief Executive may or may not be appointed out of directors. A Chief Executive appointed not already a
director, by virtue of his designation as Chief Executive will automatically be considered as Director of
the company. This type of Director is called as Ex-Officio Director. He will be director till the time he is on
post of CEO.

13.Sole Director:
Single member company (SMC) has only one member who is the director of the company and is known
as Sole Director. If SMC has more than one director then he will be called as Member Director

14.Nominee Director:
The sole member of the SMC, is required to nominate a person as nominee director to act as director in
case of his death.

15.Alternate Nominee Director:

It is also the requirement of law in the case of SMC that the director must nominate an Alternate
Nominee Director. In case of death of the Sole director, if Nominee Director is not available then
Alternate Nominee director will manage the company.

16.Executive Director:
A director may be a full time working director, namely, managing or whole time director covered by a
service contract who is incharge of day-to-day conduct of affairs of company.

17.Non Executive Director:

Company may also have non-executive directors who do not have anything to do with the day-to-day
management of the company but attend board meetings.

18.Independent Director
Definition of Independent Director is now wider and includes a Non Executive Director (NED),
who:

 Does not have any material pecuniary relationships or transactions with the company's
associates.
 Is not related to promoters or persons occupying management positions at the Board level of a
level below.
  Has not been a company executive in past 3 years.
 Is not/was not in last 3 years a partner or executive of the statutory audit/internal
audit/consulting firm.
 Is not a material suppliers, service provider, customer, lessor or lessee of the company
 Does not own 2% or more of voting shares.

The test of independence principally emanates from the fact whether such person can be reasonably
perceived as being able to exercise independent business judgment without being subservient to any
form of conflict of interest.

As per Code of Governance 2012, the board of directors of each listed company shall have at least one
and preferably one third of the total members of the board as independent directors

Director should be a Natural Person:

Director can only be a natural (physical) person. Company is also a person but an artificial person so it
cannot be director of the company but can be a member of the company.

Qualifications of Director of a Company

As per section 187 of the companies Ordinance 1984, any Natural person is eligible to become a director
of a company except the following persons

12. A minor
13. A person of unsound mind
14. A person who has applied in a court of law for his insolvency and whose application is still
pending.
15. A person who is a bankrupt.
16. A person who is an un-discharged insolvent
17. A person who has been declared a guilty of an offence of moral turpitude by a court of law
18. A person who has been debarred from holding an office of the director under any provision of
the Companies Ordinance, 1984.
19. A person who has been declared by the Court as having lack of fiduciary behavior at any time
during the last five years.
20. A person who is not a member of the company. However, the following persons may become
directors of a company without being a member of the company:

VI. A person nominated by the Government

VII. A person nominated by an institution or an authority
VIII. A person nominated by the creditors
IX. A whole time director who is an employee of the company
X. A chief executive of the company
 21. A person who has been declared by the Court as defaulter in repayment of a loan amounting to
rupees one million or more
22. A person who is:

IV. Engaged in the business of brokerage;

V. A spouse of such person
VI. A sponsor, director or officer of a corporate brokerage house

This prohibition shall not apply where the company is a stock exchange.

Directors' Remuneration
The director’s remuneration is fixed by the appointing authority, ie, the directors or the members in the
general meeting of the company according to the provisions of the articles of association. Remuneration
for performing extra services, such as the holding of the office of the Chairman, shall also be fixed by
directors or the members which cannot increase the limit provided in the AOA.

Powers of Directors
The directors of a company manage the company. All the directors collectively are called as Board of
Directors. The routine business of the company is managed by its directors. Directors have powers to
pay expenses incurred on running the business etc. Mostly for routine management decisions they do
not need any board resolution. But there are few issues for which board resolution to be passed like
issuance of shares etc.

Directors' Meetings
The meeting of the directors of a company is called directors' meeting. A public company must have at
least four (4) Board Meetings in a year. The directors shall meet at least once in each quarter of a year.
The law is silent as to the minimum number of such meetings to be held by a private company. For
private companies it may be decided in AOA.
 Directors
 A director is an officer of the company concerned with the management of the affairs of
the company on behalf of the members.
 He acts as an agent and representative of the company.
 Only a natural person can become a director of a company

Minimum Number of Directors:

Following table depicts minimum number of Directors:

Private company can be divided into two:

V. Single member company requires minimum one director

VI. Multi Member Company (more than one member) requires having minimum two directors.

Public Company can be divided into two

V. Non-listed Company requires minimum three directors.

VI. Listed Company requires minimum seven directors.

Kinds of Directors

19.Elected Director
First Directors are elected by the subscriber members of the company. Then Subsequent directors are
elected in the Annual General Meeting by the members of the company. First Director will hold the
office till the election of directors in the first annual general meeting of the company whereas the term
of Office of a subsequent director is three years

20.Nominated Director:
These are the Directors who are not elected rather nominated by other persons or body. Conditions
related to law regarding election, terms of office, retirement and removal of directors do not apply to
nominated directors.
Directors may be nominated by the government, Creditors, Company making investment in company
and foreign investor

21.Ex-Officio Director:
Chief Executive may or may not be appointed out of directors. A Chief Executive appointed not already a
director, by virtue of his designation as Chief Executive will automatically be considered as Director of
the company. This type of Director is called as Ex-Officio Director. He will be director till the time he is on
post of CEO.

22.Sole Director:
Single member company (SMC) has only one member who is the director of the company and is known
as Sole Director. If SMC has more than one director then he will be called as Member Director

23.Nominee Director:
The sole member of the SMC, is required to nominate a person as nominee director to act as director in
case of his death.

24.Alternate Nominee Director:

It is also the requirement of law in the case of SMC that the director must nominate an Alternate
Nominee Director. In case of death of the Sole director, if Nominee Director is not available then
Alternate Nominee director will manage the company.

25.Executive Director:
A director may be a full time working director, namely, managing or whole time director covered by a
service contract who is incharge of day-to-day conduct of affairs of company.

26.Non Executive Director:

Company may also have non-executive directors who do not have anything to do with the day-to-day
management of the company but attend board meetings.

27.Independent Director
Definition of Independent Director is now wider and includes a Non Executive Director (NED),
who:

 Does not have any material pecuniary relationships or transactions with the company's
associates.
 Is not related to promoters or persons occupying management positions at the Board level of a
level below.
  Has not been a company executive in past 3 years.
 Is not/was not in last 3 years a partner or executive of the statutory audit/internal
audit/consulting firm.
 Is not a material suppliers, service provider, customer, lessor or lessee of the company
 Does not own 2% or more of voting shares.

The test of independence principally emanates from the fact whether such person can be reasonably
perceived as being able to exercise independent business judgment without being subservient to any
form of conflict of interest.

As per Code of Governance 2012, the board of directors of each listed company shall have at least one
and preferably one third of the total members of the board as independent directors

Director should be a Natural Person:

Director can only be a natural (physical) person. Company is also a person but an artificial person so it
cannot be director of the company but can be a member of the company.

Qualifications of Director of a Company

As per section 187 of the companies Ordinance 1984, any Natural person is eligible to become a director
of a company except the following persons

23. A minor
24. A person of unsound mind
25. A person who has applied in a court of law for his insolvency and whose application is still
pending.
26. A person who is a bankrupt.
27. A person who is an un-discharged insolvent
28. A person who has been declared a guilty of an offence of moral turpitude by a court of law
29. A person who has been debarred from holding an office of the director under any provision of
the Companies Ordinance, 1984.
30. A person who has been declared by the Court as having lack of fiduciary behavior at any time
during the last five years.
31. A person who is not a member of the company. However, the following persons may become
directors of a company without being a member of the company:

XI. A person nominated by the Government

XII. A person nominated by an institution or an authority
XIII. A person nominated by the creditors
XIV. A whole time director who is an employee of the company
XV. A chief executive of the company
 32. A person who has been declared by the Court as defaulter in repayment of a loan amounting to
rupees one million or more
33. A person who is:

VII. Engaged in the business of brokerage;

VIII. A spouse of such person
IX. A sponsor, director or officer of a corporate brokerage house

This prohibition shall not apply where the company is a stock exchange.

Directors' Remuneration
The director’s remuneration is fixed by the appointing authority, ie, the directors or the members in the
general meeting of the company according to the provisions of the articles of association. Remuneration
for performing extra services, such as the holding of the office of the Chairman, shall also be fixed by
directors or the members which cannot increase the limit provided in the AOA.

Powers of Directors
The directors of a company manage the company. All the directors collectively are called as Board of
Directors. The routine business of the company is managed by its directors. Directors have powers to
pay expenses incurred on running the business etc. Mostly for routine management decisions they do
not need any board resolution. But there are few issues for which board resolution to be passed like
issuance of shares etc.

Directors' Meetings
The meeting of the directors of a company is called directors' meeting. A public company must have at
least four (4) Board Meetings in a year. The directors shall meet at least once in each quarter of a year.
The law is silent as to the minimum number of such meetings to be held by a private company. For
private companies it may be decided in AOA.
 Directors
 A director is an officer of the company concerned with the management of the affairs of
the company on behalf of the members.
 He acts as an agent and representative of the company.
 Only a natural person can become a director of a company

Minimum Number of Directors:

Following table depicts minimum number of Directors:

Private company can be divided into two:

VII. Single member company requires minimum one director

VIII. Multi Member Company (more than one member) requires having minimum two directors.

Public Company can be divided into two

VII. Non-listed Company requires minimum three directors.

VIII. Listed Company requires minimum seven directors.

Kinds of Directors

28.Elected Director
First Directors are elected by the subscriber members of the company. Then Subsequent directors are
elected in the Annual General Meeting by the members of the company. First Director will hold the
office till the election of directors in the first annual general meeting of the company whereas the term
of Office of a subsequent director is three years

29.Nominated Director:
These are the Directors who are not elected rather nominated by other persons or body. Conditions
related to law regarding election, terms of office, retirement and removal of directors do not apply to
nominated directors.
Directors may be nominated by the government, Creditors, Company making investment in company
and foreign investor

30.Ex-Officio Director:
Chief Executive may or may not be appointed out of directors. A Chief Executive appointed not already a
director, by virtue of his designation as Chief Executive will automatically be considered as Director of
the company. This type of Director is called as Ex-Officio Director. He will be director till the time he is on
post of CEO.

31.Sole Director:
Single member company (SMC) has only one member who is the director of the company and is known
as Sole Director. If SMC has more than one director then he will be called as Member Director

32.Nominee Director:
The sole member of the SMC, is required to nominate a person as nominee director to act as director in
case of his death.

33.Alternate Nominee Director:

It is also the requirement of law in the case of SMC that the director must nominate an Alternate
Nominee Director. In case of death of the Sole director, if Nominee Director is not available then
Alternate Nominee director will manage the company.

34.Executive Director:
A director may be a full time working director, namely, managing or whole time director covered by a
service contract who is incharge of day-to-day conduct of affairs of company.

35.Non Executive Director:

Company may also have non-executive directors who do not have anything to do with the day-to-day
management of the company but attend board meetings.

36.Independent Director
Definition of Independent Director is now wider and includes a Non Executive Director (NED),
who:

 Does not have any material pecuniary relationships or transactions with the company's
associates.
 Is not related to promoters or persons occupying management positions at the Board level of a
level below.
  Has not been a company executive in past 3 years.
 Is not/was not in last 3 years a partner or executive of the statutory audit/internal
audit/consulting firm.
 Is not a material suppliers, service provider, customer, lessor or lessee of the company
 Does not own 2% or more of voting shares.

The test of independence principally emanates from the fact whether such person can be reasonably
perceived as being able to exercise independent business judgment without being subservient to any
form of conflict of interest.

As per Code of Governance 2012, the board of directors of each listed company shall have at least one
and preferably one third of the total members of the board as independent directors

Director should be a Natural Person:

Director can only be a natural (physical) person. Company is also a person but an artificial person so it
cannot be director of the company but can be a member of the company.

Qualifications of Director of a Company

As per section 187 of the companies Ordinance 1984, any Natural person is eligible to become a director
of a company except the following persons

34. A minor
35. A person of unsound mind
36. A person who has applied in a court of law for his insolvency and whose application is still
pending.
37. A person who is a bankrupt.
38. A person who is an un-discharged insolvent
39. A person who has been declared a guilty of an offence of moral turpitude by a court of law
40. A person who has been debarred from holding an office of the director under any provision of
the Companies Ordinance, 1984.
41. A person who has been declared by the Court as having lack of fiduciary behavior at any time
during the last five years.
42. A person who is not a member of the company. However, the following persons may become
directors of a company without being a member of the company:

XVI. A person nominated by the Government

XVII. A person nominated by an institution or an authority
XVIII. A person nominated by the creditors
XIX. A whole time director who is an employee of the company
XX. A chief executive of the company
 43. A person who has been declared by the Court as defaulter in repayment of a loan amounting to
rupees one million or more
44. A person who is:

X. Engaged in the business of brokerage;

XI. A spouse of such person
XII. A sponsor, director or officer of a corporate brokerage house

This prohibition shall not apply where the company is a stock exchange.

Directors' Remuneration
The director’s remuneration is fixed by the appointing authority, ie, the directors or the members in the
general meeting of the company according to the provisions of the articles of association. Remuneration
for performing extra services, such as the holding of the office of the Chairman, shall also be fixed by
directors or the members which cannot increase the limit provided in the AOA.

Powers of Directors
The directors of a company manage the company. All the directors collectively are called as Board of
Directors. The routine business of the company is managed by its directors. Directors have powers to
pay expenses incurred on running the business etc. Mostly for routine management decisions they do
not need any board resolution. But there are few issues for which board resolution to be passed like
issuance of shares etc.

Directors' Meetings
The meeting of the directors of a company is called directors' meeting. A public company must have at
least four (4) Board Meetings in a year. The directors shall meet at least once in each quarter of a year.
The law is silent as to the minimum number of such meetings to be held by a private company. For
private companies it may be decided in AOA.
 Directors
 A director is an officer of the company concerned with the management of the affairs of
the company on behalf of the members.
 He acts as an agent and representative of the company.
 Only a natural person can become a director of a company

Minimum Number of Directors:

Following table depicts minimum number of Directors:

Private company can be divided into two:

IX. Single member company requires minimum one director

X. Multi Member Company (more than one member) requires having minimum two directors.

Public Company can be divided into two

IX. Non-listed Company requires minimum three directors.

X. Listed Company requires minimum seven directors.

Kinds of Directors

37.Elected Director
First Directors are elected by the subscriber members of the company. Then Subsequent directors are
elected in the Annual General Meeting by the members of the company. First Director will hold the
office till the election of directors in the first annual general meeting of the company whereas the term
of Office of a subsequent director is three years

38.Nominated Director:
These are the Directors who are not elected rather nominated by other persons or body. Conditions
related to law regarding election, terms of office, retirement and removal of directors do not apply to
nominated directors.
Directors may be nominated by the government, Creditors, Company making investment in company
and foreign investor

39.Ex-Officio Director:
Chief Executive may or may not be appointed out of directors. A Chief Executive appointed not already a
director, by virtue of his designation as Chief Executive will automatically be considered as Director of
the company. This type of Director is called as Ex-Officio Director. He will be director till the time he is on
post of CEO.

40.Sole Director:
Single member company (SMC) has only one member who is the director of the company and is known
as Sole Director. If SMC has more than one director then he will be called as Member Director

41.Nominee Director:
The sole member of the SMC, is required to nominate a person as nominee director to act as director in
case of his death.

42.Alternate Nominee Director:

It is also the requirement of law in the case of SMC that the director must nominate an Alternate
Nominee Director. In case of death of the Sole director, if Nominee Director is not available then
Alternate Nominee director will manage the company.

43.Executive Director:
A director may be a full time working director, namely, managing or whole time director covered by a
service contract who is incharge of day-to-day conduct of affairs of company.

44.Non Executive Director:

Company may also have non-executive directors who do not have anything to do with the day-to-day
management of the company but attend board meetings.

45.Independent Director
Definition of Independent Director is now wider and includes a Non Executive Director (NED),
who:

 Does not have any material pecuniary relationships or transactions with the company's
associates.
 Is not related to promoters or persons occupying management positions at the Board level of a
level below.
  Has not been a company executive in past 3 years.
 Is not/was not in last 3 years a partner or executive of the statutory audit/internal
audit/consulting firm.
 Is not a material suppliers, service provider, customer, lessor or lessee of the company
 Does not own 2% or more of voting shares.

The test of independence principally emanates from the fact whether such person can be reasonably
perceived as being able to exercise independent business judgment without being subservient to any
form of conflict of interest.

As per Code of Governance 2012, the board of directors of each listed company shall have at least one
and preferably one third of the total members of the board as independent directors

Director should be a Natural Person:

Director can only be a natural (physical) person. Company is also a person but an artificial person so it
cannot be director of the company but can be a member of the company.

Qualifications of Director of a Company

As per section 187 of the companies Ordinance 1984, any Natural person is eligible to become a director
of a company except the following persons

45. A minor
46. A person of unsound mind
47. A person who has applied in a court of law for his insolvency and whose application is still
pending.
48. A person who is a bankrupt.
49. A person who is an un-discharged insolvent
50. A person who has been declared a guilty of an offence of moral turpitude by a court of law
51. A person who has been debarred from holding an office of the director under any provision of
the Companies Ordinance, 1984.
52. A person who has been declared by the Court as having lack of fiduciary behavior at any time
during the last five years.
53. A person who is not a member of the company. However, the following persons may become
directors of a company without being a member of the company:

XXI. A person nominated by the Government

XXII. A person nominated by an institution or an authority
XXIII. A person nominated by the creditors
XXIV. A whole time director who is an employee of the company
XXV. A chief executive of the company
 54. A person who has been declared by the Court as defaulter in repayment of a loan amounting to
rupees one million or more
55. A person who is:

XIII. Engaged in the business of brokerage;

XIV. A spouse of such person
XV. A sponsor, director or officer of a corporate brokerage house

This prohibition shall not apply where the company is a stock exchange.

Directors' Remuneration
The director’s remuneration is fixed by the appointing authority, ie, the directors or the members in the
general meeting of the company according to the provisions of the articles of association. Remuneration
for performing extra services, such as the holding of the office of the Chairman, shall also be fixed by
directors or the members which cannot increase the limit provided in the AOA.

Powers of Directors
The directors of a company manage the company. All the directors collectively are called as Board of
Directors. The routine business of the company is managed by its directors. Directors have powers to
pay expenses incurred on running the business etc. Mostly for routine management decisions they do
not need any board resolution. But there are few issues for which board resolution to be passed like
issuance of shares etc.

Directors' Meetings
The meeting of the directors of a company is called directors' meeting. A public company must have at
least four (4) Board Meetings in a year. The directors shall meet at least once in each quarter of a year.
The law is silent as to the minimum number of such meetings to be held by a private company. For
private companies it may be decided in AOA.
 Directors
 A director is an officer of the company concerned with the management of the affairs of
the company on behalf of the members.
 He acts as an agent and representative of the company.
 Only a natural person can become a director of a company

Minimum Number of Directors:

Following table depicts minimum number of Directors:

Private company can be divided into two:

XI. Single member company requires minimum one director

XII. Multi Member Company (more than one member) requires having minimum two directors.

Public Company can be divided into two

XI. Non-listed Company requires minimum three directors.

XII. Listed Company requires minimum seven directors.

Kinds of Directors

46.Elected Director
First Directors are elected by the subscriber members of the company. Then Subsequent directors are
elected in the Annual General Meeting by the members of the company. First Director will hold the
office till the election of directors in the first annual general meeting of the company whereas the term
of Office of a subsequent director is three years

47.Nominated Director:
These are the Directors who are not elected rather nominated by other persons or body. Conditions
related to law regarding election, terms of office, retirement and removal of directors do not apply to
nominated directors.
Directors may be nominated by the government, Creditors, Company making investment in company
and foreign investor

48.Ex-Officio Director:
Chief Executive may or may not be appointed out of directors. A Chief Executive appointed not already a
director, by virtue of his designation as Chief Executive will automatically be considered as Director of
the company. This type of Director is called as Ex-Officio Director. He will be director till the time he is on
post of CEO.

49.Sole Director:
Single member company (SMC) has only one member who is the director of the company and is known
as Sole Director. If SMC has more than one director then he will be called as Member Director

50.Nominee Director:
The sole member of the SMC, is required to nominate a person as nominee director to act as director in
case of his death.

51.Alternate Nominee Director:

It is also the requirement of law in the case of SMC that the director must nominate an Alternate
Nominee Director. In case of death of the Sole director, if Nominee Director is not available then
Alternate Nominee director will manage the company.

52.Executive Director:
A director may be a full time working director, namely, managing or whole time director covered by a
service contract who is incharge of day-to-day conduct of affairs of company.

53.Non Executive Director:

Company may also have non-executive directors who do not have anything to do with the day-to-day
management of the company but attend board meetings.

54.Independent Director
Definition of Independent Director is now wider and includes a Non Executive Director (NED),
who:

 Does not have any material pecuniary relationships or transactions with the company's
associates.
 Is not related to promoters or persons occupying management positions at the Board level of a
level below.
  Has not been a company executive in past 3 years.
 Is not/was not in last 3 years a partner or executive of the statutory audit/internal
audit/consulting firm.
 Is not a material suppliers, service provider, customer, lessor or lessee of the company
 Does not own 2% or more of voting shares.

The test of independence principally emanates from the fact whether such person can be reasonably
perceived as being able to exercise independent business judgment without being subservient to any
form of conflict of interest.

As per Code of Governance 2012, the board of directors of each listed company shall have at least one
and preferably one third of the total members of the board as independent directors

Director should be a Natural Person:

Director can only be a natural (physical) person. Company is also a person but an artificial person so it
cannot be director of the company but can be a member of the company.

Qualifications of Director of a Company

As per section 187 of the companies Ordinance 1984, any Natural person is eligible to become a director
of a company except the following persons

56. A minor
57. A person of unsound mind
58. A person who has applied in a court of law for his insolvency and whose application is still
pending.
59. A person who is a bankrupt.
60. A person who is an un-discharged insolvent
61. A person who has been declared a guilty of an offence of moral turpitude by a court of law
62. A person who has been debarred from holding an office of the director under any provision of
the Companies Ordinance, 1984.
63. A person who has been declared by the Court as having lack of fiduciary behavior at any time
during the last five years.
64. A person who is not a member of the company. However, the following persons may become
directors of a company without being a member of the company:

XXVI. A person nominated by the Government

XXVII. A person nominated by an institution or an authority
XXVIII. A person nominated by the creditors
XXIX. A whole time director who is an employee of the company
XXX. A chief executive of the company
 65. A person who has been declared by the Court as defaulter in repayment of a loan amounting to
rupees one million or more
66. A person who is:

XVI. Engaged in the business of brokerage;

XVII. A spouse of such person
XVIII. A sponsor, director or officer of a corporate brokerage house

This prohibition shall not apply where the company is a stock exchange.

Directors' Remuneration
The director’s remuneration is fixed by the appointing authority, ie, the directors or the members in the
general meeting of the company according to the provisions of the articles of association. Remuneration
for performing extra services, such as the holding of the office of the Chairman, shall also be fixed by
directors or the members which cannot increase the limit provided in the AOA.

Powers of Directors
The directors of a company manage the company. All the directors collectively are called as Board of
Directors. The routine business of the company is managed by its directors. Directors have powers to
pay expenses incurred on running the business etc. Mostly for routine management decisions they do
not need any board resolution. But there are few issues for which board resolution to be passed like
issuance of shares etc.

Directors' Meetings
The meeting of the directors of a company is called directors' meeting. A public company must have at
least four (4) Board Meetings in a year. The directors shall meet at least once in each quarter of a year.
The law is silent as to the minimum number of such meetings to be held by a private company. For
private companies it may be decided in AOA.
 Directors
 A director is an officer of the company concerned with the management of the affairs of
the company on behalf of the members.
 He acts as an agent and representative of the company.
 Only a natural person can become a director of a company

Minimum Number of Directors:

Following table depicts minimum number of Directors:

Private company can be divided into two:

XIII. Single member company requires minimum one director

XIV. Multi Member Company (more than one member) requires having minimum two directors.

Public Company can be divided into two

XIII. Non-listed Company requires minimum three directors.

XIV. Listed Company requires minimum seven directors.

Kinds of Directors

55.Elected Director
First Directors are elected by the subscriber members of the company. Then Subsequent directors are
elected in the Annual General Meeting by the members of the company. First Director will hold the
office till the election of directors in the first annual general meeting of the company whereas the term
of Office of a subsequent director is three years

56.Nominated Director:
These are the Directors who are not elected rather nominated by other persons or body. Conditions
related to law regarding election, terms of office, retirement and removal of directors do not apply to
nominated directors.
Directors may be nominated by the government, Creditors, Company making investment in company
and foreign investor

57.Ex-Officio Director:
Chief Executive may or may not be appointed out of directors. A Chief Executive appointed not already a
director, by virtue of his designation as Chief Executive will automatically be considered as Director of
the company. This type of Director is called as Ex-Officio Director. He will be director till the time he is on
post of CEO.

58.Sole Director:
Single member company (SMC) has only one member who is the director of the company and is known
as Sole Director. If SMC has more than one director then he will be called as Member Director

59.Nominee Director:
The sole member of the SMC, is required to nominate a person as nominee director to act as director in
case of his death.

60.Alternate Nominee Director:

It is also the requirement of law in the case of SMC that the director must nominate an Alternate
Nominee Director. In case of death of the Sole director, if Nominee Director is not available then
Alternate Nominee director will manage the company.

61.Executive Director:
A director may be a full time working director, namely, managing or whole time director covered by a
service contract who is incharge of day-to-day conduct of affairs of company.

62.Non Executive Director:

Company may also have non-executive directors who do not have anything to do with the day-to-day
management of the company but attend board meetings.

63.Independent Director
Definition of Independent Director is now wider and includes a Non Executive Director (NED),
who:

 Does not have any material pecuniary relationships or transactions with the company's
associates.
 Is not related to promoters or persons occupying management positions at the Board level of a
level below.
  Has not been a company executive in past 3 years.
 Is not/was not in last 3 years a partner or executive of the statutory audit/internal
audit/consulting firm.
 Is not a material suppliers, service provider, customer, lessor or lessee of the company
 Does not own 2% or more of voting shares.

The test of independence principally emanates from the fact whether such person can be reasonably
perceived as being able to exercise independent business judgment without being subservient to any
form of conflict of interest.

As per Code of Governance 2012, the board of directors of each listed company shall have at least one
and preferably one third of the total members of the board as independent directors

Director should be a Natural Person:

Director can only be a natural (physical) person. Company is also a person but an artificial person so it
cannot be director of the company but can be a member of the company.

Qualifications of Director of a Company

As per section 187 of the companies Ordinance 1984, any Natural person is eligible to become a director
of a company except the following persons

67. A minor
68. A person of unsound mind
69. A person who has applied in a court of law for his insolvency and whose application is still
pending.
70. A person who is a bankrupt.
71. A person who is an un-discharged insolvent
72. A person who has been declared a guilty of an offence of moral turpitude by a court of law
73. A person who has been debarred from holding an office of the director under any provision of
the Companies Ordinance, 1984.
74. A person who has been declared by the Court as having lack of fiduciary behavior at any time
during the last five years.
75. A person who is not a member of the company. However, the following persons may become
directors of a company without being a member of the company:

XXXI. A person nominated by the Government

XXXII. A person nominated by an institution or an authority
XXXIII. A person nominated by the creditors
XXXIV. A whole time director who is an employee of the company
XXXV. A chief executive of the company
 76. A person who has been declared by the Court as defaulter in repayment of a loan amounting to
rupees one million or more
77. A person who is:

XIX. Engaged in the business of brokerage;

XX. A spouse of such person
XXI. A sponsor, director or officer of a corporate brokerage house

This prohibition shall not apply where the company is a stock exchange.

Directors' Remuneration
The director’s remuneration is fixed by the appointing authority, ie, the directors or the members in the
general meeting of the company according to the provisions of the articles of association. Remuneration
for performing extra services, such as the holding of the office of the Chairman, shall also be fixed by
directors or the members which cannot increase the limit provided in the AOA.

Powers of Directors
The directors of a company manage the company. All the directors collectively are called as Board of
Directors. The routine business of the company is managed by its directors. Directors have powers to
pay expenses incurred on running the business etc. Mostly for routine management decisions they do
not need any board resolution. But there are few issues for which board resolution to be passed like
issuance of shares etc.

Directors' Meetings
The meeting of the directors of a company is called directors' meeting. A public company must have at
least four (4) Board Meetings in a year. The directors shall meet at least once in each quarter of a year.
The law is silent as to the minimum number of such meetings to be held by a private company. For
private companies it may be decided in AOA.