ANSWER 13:

No person who is ineligible to become a director of a company under section 187 shall be appointed or
continue as the chief executive of any company.

Restriction under section 187:

No person shall be appointed 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 Ordinance; Companies
Ordinance, 1984
g) has betrayed lack of fiduciary behavior and a declaration to this effect has been made by the
Court under section 217 at any time during the preceding five years.

ANSWER 14:

The directors shall make out and attach to the financial statements, a report with respect to the state of
the company‘s affairs and a fair review of its business, the amount (if any), that the directors
recommend should be paid by way of dividend and the amount (if any), they propose to carry to the
Reserve Fund, General Reserve or Reserve Account.

(2) In the case of a public company or a private company which is a subsidiary of a public company, the
directors report, in addition to the matters specified in sub-section (1) must state-

(a) the names of the persons who, at any time during the financial year, were directors of the company;

(b) the principal activities and the development and performance of the company’s business during the
financial year

(c) a description of the principal risks and uncertainties facing the company;

(d) any changes that have occurred during the financial year concerning the nature of the business of
the company or of its subsidiaries, or any other company in which the company has interest,

(e) the information and explanation in regard to any contents of modification in the auditor ‘s report;

(f) information about the pattern of holding of the shares in the form specified;

(g) the name and country of origin of the holding company, if such company is a foreign company;
(h) the earning per share;

(i) the reasons for loss if incurred during the year and future prospects of profit, if any;

(j) information about defaults in payment of any debts and reasons thereof;

(k) comments in respect of adequacy internal financial controls;

(l) any material changes and commitments affecting the financial position of the company which have
occurred between the end of the financial year of the company to which the financial statement relates
and the date of the report

(m) any other information as may be specified.

The report referred to in sub-section (1) shall be signed by the chairman of the directors or the chief
executive of the company on behalf of the directors if authorised in that behalf of the directors and,
when not so authorised, shall be signed by the chief executive and such number of directors as are
required to sign the balance sheet and profit and loss account under section 241.

ANSWER 15:

Reduction of share capital

Subject to confirmation by the Court, a company limited by shares, if so authorized by its articles, may
by special resolution reduce its share capital in any way, and in particular and without prejudice to the
generality of the foregoing powers may -
 
 Extinguish or reduce the liability on any of its shares in respect of share capital not paid up

 Either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up
share capital which is lost or unrepresented by available assets

 Either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up
share capital which is in excess of the needs of the company; and may, if and so far as is
necessary, alter its memorandum by reducing the amount of its share capital and of its shares
accordingly.

ANSWER 16:

121.  Certain mortgages and charges to be void if not registered. -

 
(1)    Every mortgage, charge or other interest created after the commencement of this Ordinance by a
company and being either -
 
(a)    a mortgage or charge for the purpose of securing any issue of debentures
 
(b)    a mortgage or charge on uncalled share capital of the company
 
(c)    a mortgage or charge on any immovable property wherever situate, or any interest therein
 
(d)    a mortgage or charge on any book debts of the company

ANSWER 17:

The board of directors shall maintain a complete record of particulars of the significant policies along
with their date of approval or updating. The significant policies may include but are not limited to the
following:

1. governance of risks and internal control measures

2. human resource management including preparation of a succession plan
3. permissible fee for non-executive directors including independent directors
4. procurement of goods and services
5. communication policy and investors’/shareholders’ relations
6. marketing
7. determination of terms of credit and discount to customers
8. write-off of bad/doubtful debts, advances and receivables
9. sale and lease of assets, undertaking, capital expenditure, planning and control
10. investments and disinvestment of funds
11. debt coverage
12. determination and delegation of financial powers
13. transactions or contracts with associated companies and related parties
14. environmental, social and governance (ESG) including health and safety aspects in business
strategies that promote sustainability. This includes but is not limited to corporate social
responsibility (CSR) initiatives and other philanthropic activities, donations / contributions to
charities and other social causes
15. whistle blowing policy, by establishing a mechanism to receive, handle complaints in a fair and
transparent manner while providing protection to the complainant against victimization.

ANSWER 18:

PROCEDURE FOR COMPULSARY WINDING UP/ WINDING UP BY THE ORDER OF COURT:

Step 1: The company needs to pass resolution for winding up. To pass Special Resolution by 3/4th
majority of the members of the company that the company be wound up by the Court in case if the
company itself intend to file a petition and to file the Special Resolution on Form 26 with the registrar.

Step 2: Prepare a list of the assets to ascertain that the company is unable to pay its debts. 3.

Step 3: Prepare a list of the creditors

Step 4: In case of defaults in payments the creditor or creditors to make a decision for the filing of the
winding up petition.
Step 5: In case if the Commission or Registrar or a person authorized by the Commission intend to file a
petition, they should not file a petition, for winding up of the company, unless an investigation into the
affairs of the company has revealed that it was formed for any fraudulent or unlawful purpose or that it
is carrying on a business not authorized by its memorandum or that its business is being conducted in a
manner oppressive to any of its management has been guilty of fraud, misfeasance or other misconduct
towards the company or towards any of its members.

Step 5: Engage advocates for the preparation and filing of the petition.

PROCEDURE FOR VOLUNTAR WINDING UP:

Step 1. Where it is proposed to wind up a company voluntarily, its directors make a declaration of
solvency on Form 107 prescribed under Rule 269 of the Rules duly supported by an auditor’s report and
make a decision in their meeting that the proposal to this effect may be submitted to the shareholders.
They, then, call a general meeting (Annual or Extra Ordinary) of the members (Section 362 of the
Ordinance)
Step 2. The company, on the recommendations of directors, decides that the company be wound up
voluntarily and passes a Special Resolution, in general meeting (Annual or Extra Ordinary) appoints a
liquidator and fixes his remuneration. On the appointment of liquidator, the Board of directors ceases to
exist. (Sections 358 and 364 of the Ordinance)
Step 3. Notice of resolution shall be notified in official Gazette within 10 days and also published in the
newspapers simultaneously. A copy of it is to be filed with registrar also. (Section 361 of the Ordinance)
Step 4. Notice of appointment or change of liquidator is to be given to registrar by the company along
with his consent within 10 days of the event. (Section 366 of the Ordinance)
Step 5. Every liquidator shall, within fourteen days of his appointment, publish in the official Gazette,
and deliver to the registrar for registration, a notice of his appointment under section 389 of the
Ordinance on Form 110 prescribed under Rule 271 of the Rules.
Step 6. If liquidator feels that full claims of the creditors cannot be met, he must call a meeting of
creditors and place before them a statement of assets and liabilities. (Section 368 of the Ordinance)
Step 7. A return of convening the creditors meeting together with the notice of meeting etc. shall be
filed by the liquidator with the registrar, within 10 days of the date of meeting. (Section 368 of the
Ordinance)
Step 8. If the winding up continues beyond one year, the liquidator should summon a general meeting
at the end of each year and make an application to the Court seeking extension of time. (Section 387(5)
of the Ordinance)
Step 9. A return of convening of each general meeting together with a copy of the notice, accounts
statement and minutes of meeting should be filed with the registrar within 10 days of the date of
meeting. (Section 369 of the Ordinance)
Step 10. As soon as affairs of the company are fully wound up, the liquidator shall make a report and
account of winding up, call a final meeting of members, notice of convening of final meeting on Form
111 prescribed under Rule 279 of the Rules before which the report / accounts shall be placed. (Section
370 of the Ordinance)
Step 11. A notice of such meeting shall be published in the Gazette and newspapers at least10 days
before the date of meeting. (Section 370 of the Ordinance).
Step 12. Within a week after the meeting, the liquidator shall send to the registrar a copy of the report
and accounts on Form 112 prescribed under Rule 279 of the Rules. (Section 370 of the Ordinance)
ANSWER 19:
Dividend shall be deemed to have been declared on the date of the general meeting in case of a
dividend declared or approved in the general meeting and on the date of commencement of closing of
share transfer for purposes of determination of entitlement of dividend in the case of an interim
dividend and where register of members is not closed for such purpose, on the date on which such
dividend is approved by the directors.

ANSWER 20:
I. Quorum requirements in respect of meeting of board of directors.
One of the first duties of the board chair is to determine if a quorum is present. Quorum
requirements for meeting of the board is provided in articles of the company. The quorum for a
meeting of board of a listed company is mandated to be not less than one-third of number of
directors or four, whichever is greater. Participation of the directors by video conferencing or by
other audio visual means shall also be counted for the purposes of quorum. In case of absence
of any director from Board meeting, reason of such absence may preferably be recorded in
minutes. The chair may invite any officer in board meeting for matters deemed important and
relevant by Board. However, an officer shall not attend such part of Board meeting in which the
matter directly conflicting their interest (for e.g. performance) is to be discussed.
II. Minimum number of directors’ meetings held in a year.

Board Meetings shall be held at least once every quarter but may be held at any time in case of
urgent circumstances.

Board Meetings shall be convened and presided over by the Chairman of the Board of Directors.
However, the first meeting of every term of the newly elected Board of Directors shall be
convened and presided over by the Director who has received the largest number of votes after
such election; if there are two or more persons with such convening rights, they shall elect from
amongst themselves one person to convene and preside over the meeting.

In case the Chairman of the Board of Directors is on leave or unable to exercise his powers for
any cause, the Vice Chairman of the Board of Directors shall act on his behalf. If the Vice
Chairman is also on leave or unable to exercise his powers for any cause, the Chairman shall
appoint a Director to act on his behalf. In the absence of such an appointee, the Directors shall
elect from amongst themselves one person to act on the behalf of the Chairman.