Question: 01 What are the Rights of Shareholders?

There are “Six” major rights of Shareholders:

 Voting Power on Major Issues. .

 Ownership in a Portion of the Company. .
 The Right to Transfer Ownership. .
 An Entitlement to Dividends. .
 Opportunity to Inspect Corporate Books and Records.
 The Right to Sue for Wrongful Acts.

Question: 02 What are restrictions in commencement of business by a Public Company?

Restriction on the commencement of business under Section # 146:

1.  A company shall not commence any business or exercise any borrowing powers unless:

a. Shares held subject to the payment of the whole amount thereof in cash have been allotted
to an amount not less in the whole than the minimum subscription.

b. Every director of the company has paid to the company full amount on each of the shares
taken or contracted to be taken by him and for which he is liable to pay in cash.

c. No money is or may become liable to be repaid to applicants for any shares or debentures
which have been offered for public subscription by reason of any failure to apply for or to
obtain permission for the shares or debentures to be dealt in on any stock exchange.

d. There has been filed with the registrar a duly verified declaration by the chief executive or
one of the directors and the secretary in the prescribed form that the aforesaid conditions have
been complied with and the registrar has issued a certificate referred to in sub-section (2); and

e. In the case of a company which has not issued a prospectus inviting the public to subscribe
for its shares, there has been filed with the registrar a statement in lieu of prospectus.

2. The registrar shall, on the filing of a duly verified declaration in accordance with the
provisions of sub-section (1) and after making such enquiries as he may deem fit to satisfy
himself that all the requirements of this Ordinance have been complied with in respect of the
commencement of business and matters precedent and incidental thereto, certify that the
company is entitled to commence business, and that certificate shall be conclusive evidence
that the company is so entitled:
 Provided that, in the case of a company which has not issued a prospectus inviting the public to
subscribe for its shares, the registrar shall not give such a certificate unless a statement in lieu
of prospectus has been filed with him.

3. Any contract made by a company before the date at which it is entitled to commence
business shall be provisional only, and shall not be binding on the company until that date, and
on that date it shall become binding.

4. Nothing in this section shall prevent the simultaneous offer for subscription or allotment of
any shares and debentures or the receipt of any money payable on application for debentures.

5. If any company commences business or exercises borrowing powers in contravention of this

section, every officer and other person who is responsible for the contravention shall, without
prejudice to any other liability, be liable to a fine not exceeding one thousand rupees for every
day during which the contravention continues.

6. Nothing in this section shall apply to a private company, or to a company limited by

guarantee and not having a share capital

Question: 03 Whether a director can call extra Ordinary General Meeting?

1. All general meetings of a company, other than the annual general meeting referred to in
section 158 and the statutory meeting mentioned in section 157 shall be called extraordinary
general meetings.

2. The directors may at any time call an extraordinary general meeting of the company to
consider any matter which requires the approval of the company in a general meeting, and
shall, on the requisition of members representing not less than one-tenth of the voting power
on the date of deposit of the requisition, forthwith proceed to call an extraordinary general
meeting.

3. The requisition shall state the objects of the meeting, be signed by the requisitionists and
deposited at the registered office of the company, and may consist of several documents in like
form, each signed by one or more requisitionists.

4. If the directors do not proceed within twenty-one days from the date of the requisition being
so deposited to cause a meeting to be called, the requisitionists, or a majority of them in value,
may themselves call the meeting, but in either case any meeting so called shall be held within
three months from the date of the deposit of the requisition.
Question: 04 Define the procedure of election of director under the provision of Company
Law?

Procedures for the election of Director:

1. The directors of a company shall, subject to section 174, fix the number of elected directors
of the company not later than thirty-five days before the convening of the general meeting at
which directors are to be elected, and the number so fixed shall not be changed except with the
prior approval of a general meeting of the company.

2. The notice of the meeting at which directors are proposed to be elected shall among other
matters, expressly state:

a. The number of elected directors fixed under sub-section (1); and

b. The names of the retiring directors.

3. Any person 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 manner provided
for sending of a notice of general meeting in the normal manner or in the case of a listed
company by publication at least in one issue each of a daily newspaper in English language and
a daily newspaper in Urdu language having circulation in the Province in which the stock
exchange on which its securities are listed is situate.

5. The directors of a company having a share capital shall, unless the number of persons who
offer them 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 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.

Question: 06 What is the majority required for the removal of Chief Executive?

According to Section # 202:

The directors of a company by resolution passed by not less than three-fourths of the 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 notwithstanding anything contained
in the articles or in any agreement between the company and such chief executive.

Question: 07 Can Chief Executive of a Company engage himself in a business competing with
companies business?

According to Section # 203:

1. A chief executive of a public company shall not directly or indirectly engage in any business
which is of the same nature as and directly competes with the business carried on by the
company of which he is the chief executive or by a subsidiary of such company.

2. Every person who is appointed as chief executive of a public company shall forthwith on such
appointment disclose to the company in writing the nature of such business and his interest
therein