Companies Ordinance 1984

1. Single Member Company

2. Single Member Company
• Private Company
• One Member Company
• (SMC-Private) Limited is written after name
• Company secretary shall be appointed
• Sole Director can not become Company
Secretary
• Nominee Director and Alternative Nominee
Director also nominated by Single Member.
• Quorum is 1 for meeting

3. Directors In SMC
SOLE DIRECTOR NOMINEE DIRECTOR ALTERNATE NOMINEE
DIRECTOR
Means the director of a
single member company
who is for the time being
the only director.
means an individual
nominated by a single
member to act as director
in case of his death;
Single Member files
nomination of nominee
Director with the registrar
at the time of
incorporation on Form S1
means an individual
nominated by a
single member to act as
nominee director in case of
no availability
of nominee director
Single Member files
nomination of nominee
Director with the registrar
at the time of
incorporation on Form S1

4. SOLE DIRECTOR NOMINEE DIRECTOR ALTERNATE NOMINEE
DIRECTOR
He can not serve as
Company Secretary in
addition to responsibility of
Sole Director
Manage The Affairs Of The
Company In Case Of Death
Of Single Member Till The
Transfer Of Shares To Legal
Heirs Of The Single Member
He can be Member of the
company.
He has same power as given
in section 196 of Companies
Ordinance 1984
Transfer the shares to legal
heirs of the single member;
and call the general meeting
of the members to elect
directors.
Directors In SMC

5. SMC converts into Normal Private Company
Transfer o f Shares/ Shares
Allotment
Death of Member Operation of Law
Pass Special Resolution; Nominee Director transfer the
Shares to legal successors
within 1-7 days of death of
Member
Pass Special Resolution;
Pass Special Resolution;
Alter AOA (Add RPL) within
1-30 days of allotment /
transfer of Shares
Alter AOA (add RPL) within
1-30 days of allotment /
transfer of Shares
Alter AOA (add RPL) within
1-30 days of allotment /
transfer of Shares
Appoint additional director if
existing Director is one.
Within 1-15 days and inform
to ROC within 1-14 days
Appoint additional director if
existing Director is one.
Within 1-15 days and inform
to ROC within 1-14 days
Appoint additional director if
existing Director is one.
Within 1-15 days and inform
to ROC within 1-14 days

6. Important clauses of
AOA of a private
Company
Restriction Prohibition Limitation
Transfer of shares
Subscription of
shares &
Debentures to
General Public
Of members
from 2 to 50
excluding
employees
NOTE
AOA : IF IBA HAD DEW CAP ARE FOR BOTH PRIVATE AND PUBLIC
COMPANIES
RPL

7. COMPANY SECRETARY
• A single member company (SMC) shall appoint a company secretary
within fifteen days of incorporation or of becoming a SMC
• The secretary shall be appointed at the time of incorporation and
subsequently on the same day or the day next following his resignation or
removal or in case of his death within seven days of the event
• Inform to ROC with 1-14 days for appointment or new appointment.
• Company shall attend all meeting but shall not have Voting power
• Company secretary does same function and in SMC It shall also be
incumbent upon the company secretary to inform the registrar concerned
about the death of the single member.
• Can be removed by Sole Director or Single Member

8. Separate person
Sole Director
Company
Secretary

9. Normal Private Company become SMC
• Passes a special resolution for change of its status and makes necessary alteration in its AOA
• Obtains approval of the Commission within 1-30 days of passing Special Resolution.
• After approval Reduce members to 1 only.
• Change in Share Register
• Change BOD, if necessary
• Intimation to ROC within 1-14 days
• Nominee Director and Alternate nominee directors are to be appointed
• Changes after Name TCS (SMC-Private) Limited
• Registrar issues Certificate

10. Important clauses of
AOA of a private
Company
Restriction Prohibition Limitation
Transfer of shares
Subscription of
shares &
Debentures to
General Public
Of members
from 2 to 50
excluding
employees
NOTE
AOA : IF IBA HAD DEW CAP ARE FOR BOTH PRIVATE AND PUBLIC
COMPANIES
RPL

11. Changes in AOA remove RPL and
Add following in AOA so private company becomes SMC
• (a) it shall not issue invitation to the public to
subscribe for any share of the
• company;
• (b) the company shall not register any share(s) in
the name of two or more persons to hold one or
more shares individually or jointly; and
• (c) number of the members of the company shall
be limited to one.

12. Meetings of directors and members
• Enables or requires any matter to be done or to be
decided by directors or members, as the case may be,
of the company; or
• Requires any matter to be decided by a resolution of
the directors or members, as the case may be, of the
company,
• Such matters shall be deemed to be satisfied if the
decision is taken by the single member or sole director,
as the case may be, and is drawn up in writing and
recorded in the minutes book

13. Member Director
• Means an individual becoming director due to
Shareholding/Membership of the company.

14. AOA
• (a) it shall not issue invitation to the public to
subscribe for any share of the company;
• (b) the company shall not register any share(s) in
the name of two or more persons to hold one or
more shares individually or jointly; and
• (c) number of the members of the company shall
be limited to one.

15. Corporate Governance Overview
The responsibilities in corporate governance apply largely to accountability and ethical strategy.

16. World COM
Listed at NASDAK USA Stock
Exchange
Took over
60
Companies
$7 Billion
expenses
not
recorded
Paid
$37 Billion
& bought
60
Companies
$2 Billion
additional
income
shown
Default
declared in
2002
$41 billion
AT & T is number 1,
W. Com was No. 2
Now W. Com is being
run under
Business Horizon
World largest
Bankruptcy
Use of Corporate
Governance is now Must

17. Resolution passed in Board
Meeting
Through
CirculationIn meeting
Meeting is
counted
Meeting is not
counted

18. Question : Test of Knowledge
A director is serving on the board of 10 listed companies
including three listed subsidiary companies of a holding
company. Is he compliant with the requirement of maximum
number of directorships of the revised code?
• Yes, maximum number of directorships of seven does not
include listed subsidiaries of a listed holding company.

19. Director in Board
Independent
Directors
Maximum
Executive
Directors
Maximum number of Executive
Directors cannot be more than
1/3rd of elected directors
including CEO
while preference is for 1/3rd
of the total members of the
board to be independent
directors.
One independent director
is mandatory

20. Representation of following
Directors in Board
Non-executive
Directors
Directors Representing
Minority Interests On Its
Board Of Directors
Independent

21. Directors:
Tax Payer & Not Defaulted
If Director is a
member of a stock
exchange, has not
been declared as a
defaulter by that
stock exchange
None of them has
defaulted in payment of
any loan to a banking
company, a DFI or an
NBFI
All the resident
directors of the
company are
registered as
taxpayers

22. Remuneration of Directors
Disclosure Of
Aggregate
Remuneration
In The Annual
Report.
Formal And Transparent
Procedure To Be
Followed

23. Training of the Board of
Directors
Training Program
must which
meets the
criteria specified
by the SECP.
It will be mandatory
for directors of
listed companies to
attain
CERTIFICATION
under any director
training program

24. Training of the Board of Directors
• It will be mandatory for directors of listed
companies to attain certification under any
director training program (DTP) offered by any
institution (local or foreign), which meets the
criteria specified by the SECP.
• The criteria are available at the websites of
the stock exchanges and the SECP.

25. Board Evaluation
The Board Has To Put In
Place / Develop
Within Two Years Of The
Implementation Of The
Code 2012
Mechanism For Undertaking
Annual Evaluation Of The
Performance Of The Board.

26. Maximum Directorship
• A director can be on the board of 7 listed
companies at the most at any one time.
• However, the limit does not include
directorship in listed subsidiaries of a listed
holding company.

27. Maximum Directorship
ExcludingA director can be
on the board of 7
listed companies at
the most at any one
time
Private
Company
Subsidiary
Companies
SMC
Unlisted
Company

28. Board Evaluation
• Within two years of the implementation of the
Code 2012, the Board has to put in place a
mechanism for undertaking annual evaluation
of the performance of the Board.

29. Chairman & CEO
• The Chairman and CEO shall not be the same
person, unless specifically provided in any
other law.
• The Chairman shall be elected from amongst
the non-executive directors of the listed
company.

30. Shall be elected from
amongst the Non-
Executive Directors of the
listed company.
The Chairman of
Board of Directors
unless specifically
provided in any
other law
Chief Executive
Officer
shall not
be CEO
shall not be
Chairman

31. Directors’ Training Program
• All listed companies shall make appropriate
arrangements to carry out orientation courses for their
directors to acquaint them with this code, applicable
laws, their duties and responsibilities to enable them
to effectively manage the affairs of the listed
companies for and on behalf of shareholders.
• It shall be mandatory for all the directors of the listed
companies to have certification under any directors’
training program offered by institutions—local or
foreign—that meet the criteria specified by the SECP:

32. If a foreign director on the board of a listed company has already
participated in a director training program abroad, then will it still be
mandatory for him to attend the orientation and director training
program as required by the Code 2012?
• It is mandatory for the company to provide orientation to
all directors - local and foreign.
• An orientation should cover the relevant information about
the company as well as the relevant governing laws, rules
and regulations.
• Foreign directors who have received training aboard shall
be exempt from Directors’ Training Program (DTP)
requirement of the Code 2012 if the program they attended
broadly covered the areas stated in the criteria specified by
the SECP for the purpose.

33. Approval of Accounts which
are duly reviewed &
Audited
Audit
Committee or
The Board Of
Directors
Second Quarter &
Annual Accounts
Second Quarter &
Annual Accounts
OR

34. Circulation of Quarterly
Accounts to Members, ROC,
SECP, Stock Exchange
Corporate
Governance
Companies
Ordinance
Does not require
Directors review
report
Add also Directors
review report

35. Attending of Meeting of
Board Meeting
Company
SecretaryCFO
CFO and Company Secretary shall not attend such part of a meeting
of the Board of Directors, which involves consideration of an agenda
item relating to the CFO and Company Secretary respectively

36. Removal
Company
Secretary
Internal Audit
Head
By the approval of Board of Directors

37. Outsource Internal Audit
Other than
Statutory Audit
Firm
Allowed but
Must not be
Statutory
Auditors

38. Outsourcing Internal Audit Function
• The internal audit function may be outsourced by a
listed company to a professional services firm or be
performed by the internal audit staff of the holding
company.
• In the event of outsourcing the internal audit function,
the company shall appoint or designate a fulltime
employee other than the CFO, as Head of Internal
Audit, to act as coordinator between the firm providing
internal audit services and the board.

39. OUTSOURCING OF INERNAL AUDIT
• Can CFO work as head of Internal Audit if
company has taken services from outside?
– NO………… He is accounting man. Audit &
Accounting are two different work.
– AN Internal Audit had must be appointed whether
outsource option is availed or not.

40. Outsourcing Internal Audit
Function
In the event of
outsourcing the internal
audit function, the
company shall appoint or
designate a fulltime
employee.
May Be Outsourced By
A Listed Company To A
Professional Services
Firm Or
other than the CFO, as
Head of Internal Audit,
to act as coordinator
between
Be Performed By The
Internal Audit Staff Of
The Holding Company.
the firm providing
outsource Internal
audit services and
the board
Internal Audit Staff
Of The Holding
Company

41. Board of Directors
Must appoint
Head of Internal
Audit
Who looks after
the Internal
Control & Audit
Functions
In case of out
Source, He
liaison the
Professional firm
with
BOD
Departments of
organization

42. Audit Committee:
• The Chairman of the audit committee shall be an
independent director, who shall not be the
chairman of the board.
• Audit Committee shall comprise of non-executive
directors.
• The secretary of Audit Committee shall either be
the Company Secretary or Head of Internal Audit.
However, the CFO shall not be appointed as the
secretary to the Audit Committee

43. Audit Committee
Established by
Listed Company
3 Members
Out of 3 one
member must
understand
Financial
Statements and
Economics
One
Chairman
2 other
Members
Normally
members are non
Executive Director
But Independent
Directors are
preferred

44. Human Resource & Remuneration
Committee
Members
(Preferred
Independent
Director)
Chairman
Other members
CEO is also
Included by Board in
HR & RC
CEO
Gives
Consideration
about people
reporting to him
Shall not
participate
If proceedings
relates to CEO
benefits
Responsible
Recommending
to Board for
HR Policy
Succession Plan
Executive Compensation
Consideration for CEO

45. Chairman Audit Committee
Shall Not Be The
Chairman Of The
Board.
Shall Be An
INDEPENDENT
DIRECTOR

46. Minimum Meeting of Audit
Committee at least one
meeting in each Quarter
Quarter 1 Quarter 4Quarter 3Quarter 2
More than 1 meeting in
each quarter is possible

47. Who can be appointed as the secretary of the Audit
Committee?
• The secretary of the Audit Committee shall
either be the Company Secretary or Head of
Internal Audit.
• However, the CFO shall not be appointed as
the secretary to the Audit Committee.

48. Secretary
Company SecretaryHead of
Internal Audit
Chief Financial
Officer
Audit Committee
May be Not possible

49. Audit Committee Meeting
approval of interim and
final results of the
company and as required
by the CCG
AT LEAST ONCE
EVERY QUARTER

50. Head of Internal Audit
No person shall be appointed as the Head of Internal Audit of a listed
company unless he/she has 5 years of relevant audit experience and
Member of a
recognized
body of
professional
accountants;
Certified
Internal
Auditor;
Certified Internal
Control Auditor
Certified Fraud
Examiner
individuals serving as Head of Internal Audit of a listed company for the last
five years at the time of coming into effect of this Code shall be exempted
from the above qualification requirement

51. Head of Internal Audit
a director cannot be appointed,
in any capacity,
in the internal audit function

52. Appointment ,
Remuneration and Term of
Employment
CFO
Company
Secretary
Internal Audit
Head
Determine by Board of Directors

53. Separate Person
Head of
Internal Audit
Company
Secretary

54. Can the positions of company secretary and internal auditor
be given to one person within a listed company?
• No. The two positions carry minimal synergy
and, therefore, should be performed by
separate persons.

55. Mr. Ali both
CFOCompany
Secretary
Mr. Ali can not be Secretary of Audit Committee.
Any employee who is conversant in secretarial work then be
appointed as Secretary audit Committee.

56. Preferred Separate Person
CFOCompany
Secretary
If CFO and Company Secretary are same person than Company
Secretary can not be Secretary of Audit Committee. Any
employee who is conversant in secretarial work then be
appointed as Secretary audit Committee.

57. Preferred to be different
Person
Legal Advisor of
the Company
Company
Secretary
Though their work are to some extent
same but Legal Advisor should be different
Person

58. Holding Company may
provide
PROFESSIONAL SERVICE TO
SUBSIDIARY
However, due care should be exercised to
comply with the directives of the SECP in
appointing external auditors to provide
other professional services

59. Holding Company can provide
Professional Services to Subsidiaries
• In case of a holding company and a subsidiary (not wholly
owned), both being listed companies, can the holding
company for the purpose of handling operational and
financial activities, provide professional services to the
subsidiary through a service contract
• The holding company may provide professional services to
its subsidiary.
• However, due care should be exercised to comply with the
directives of the SECP in appointing external auditors to
provide other professional services.

60. are mandated to present to
CFOCEO
Annual Accounts
(Both Separate And Consolidated) And
Second-quarter (Only Separate/Stand-alone)
Reviewed And Initialed By External Auditor,
Audit
Committee
Board
For The Purposes Of Identification, the responsibility of preparation of
financial statements rests with the management in accordance with
provisions of the Companies Ordinance, 1984

61. Are consolidated accounts for the second quarter required to be reviewed by
the statutory auditors?
• Consolidated accounts for the second quarter
are not required to be reviewed by the
statutory auditors.
• The requirement for the auditors to initial the
financial statements has been introduced to
ensure that only the accounts duly reviewed
or audited are presented for the approval of
the Audit Committee and the board.

62. What is meant by closed period?
• The closed period is a period during which no
director, CEO or executive shall, directly or
indirectly, deal in the shares of the listed
company in any manner.
• It is expected that such a restriction would help
minimize the risk of insider trading by key
management/directors of the company.

63. CLOSED PERIOD
RESTRICTION Period
A PERIOD DURING WHICH
NO
DIRECTOR, EXECUTIVECEO
DIRECTLY OR INDIRECTLY
Deal In The Shares Of The Listed Company In
Any Manner
such a restriction
would help minimize
the risk of insider
trading by key
management/directors
of the company

64. CLOSED PERIOD
RESTRICTION Period
Shall Start From The Day When
Any Document/Statement, Which
Forms The Basis Of Price Sensitive
Information
Start Terminate
After The
Information Is Told
To/Made Public
Is Sent To The Board Of Directors

65. Can the same person be appointed as the CFO and the
CS of a listed company?
• The terms of reference of the two positions are
distinct. It is, therefore, preferred that separate
persons handle the functions of the CFO and
company secretary within a listed company.
• The SECP Circular No 15 of July 8, 2003 also
requires listed companies to have full time
employee designated to perform specific
assignments of company secretary

66. Requirement to attend board meetings
• The CFO and Company Secretary of a listed
company or in their absence, the nominee,
appointed by the board, shall attend all meetings
of the Board of Directors.
• In the following issues CFO & Company Secretary
shall not attend meeting of the Board of
Directors,
– which involves consideration (Incentive, increments,
benefits) of an agenda item relating to the CFO and
Company Secretary respectively.

67. Passing of resolution no in meeting but
by circulation
No face to face meeting.
Resolution is acceptable but
meeting Is not counted

68. Can a broker be appointed as a director of a listed company?
• The Code 2012 does not restrict election/nomination of
brokers on the boards of listed companies.
• However, the Companies Ordinance states that no person
shall be appointed as a
– Director of a listed company if he/she 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.
• Therefore a broker cannot be appointed as a director on
the board of a listed company.

69. Should the disclosure in the directors' report regarding the
number of board meetings held during a year include the
number of resolutions passed by the board by circulation?
• The number of resolutions passed by the
board of directors of a listed company through
circulation should not be considered in
determining the number of board meetings
held during a year for the purpose of the Code
2012.

70. Can a director of a listed company be appointed
as the head of internal audit of the company?
• The internal audit function of a listed
company must be independent from the
management/directors of a listed company.
Therefore, a director cannot be appointed, in
any capacity, in the internal audit function.

71. Can the offices of company secretary and legal advisor be held by one person,
since both of them are required to be lawyers under the Code 2012 and the
Companies (Appointment of Legal Advisors) Act, 1974, respectively?
• The position of legal advisor in a company is a key appointment and
is of executive nature, duties of which should not be expected to be
fulfilled by a person who is also engaged in other responsibilities.
• As per the 1974 Rules a legal advisor must be an “Advocate” and
not merely a lawyer. Therefore qualification for the two positions in
not the same. 31
• Also, the SECP vide its Circular No 15 of July 8, 2003, reinforces that
companies should engage full-time employees to perform functions
of a "whole time secretary".

72. Significant Policies
• Governance
• Risk Management
• Investors relations
• Procurement of Goods & Services
• Marketing
• Determination of Credit terms & Discounts
• Writing off Bad Debts
• Investment & Disinvestment of funds
• Planning & Controls
• Expenditure capital in nature
• Human Resource Management & Succession Plans
• Code GRIP-MD-WIPE-H

73. Disclosure of Related Parties
• Party wise maintenance of record
• Supporting documents
• Terms & Conditions
• Received or paid in advance
• Amount of transaction
• Name of related parties
• Nature of relationship
• Nature of transaction

74. Secretarial Compliance Certificate
• Company Secretary shall furnish annually
Compliance Certificate in prescribed form to
ROC
• It means all Legal Compliance as per law has
made & fulfilled / Completed by Company.

75. Audit Committee
• Who are not allowed to be part of Audit
Committee?
• CEO
• CFO
• Head Internal Audit
• The Best person for Audit committee are
Executive Directors

76. Qualification of Internal Auditor
• Member of Professional Body
• CA, ACCA, CIMA, ICMA, CPA, CIA
• Master degree in Business administration with
specialization in Finance. (MBA-Finance),
M.Com in Finance.
• Local or Master degree in Finance.
• Experience 3 years

77. Out Source of Internal Audit Function
• It is preferred to have inside Internal Audit
Function Department
• Company must hire proper experienced &
qualified people who perform Inter audit
functions
• Law allows to take services of outsiders but
Statutory Auditors are not allowed to serve
Internal Audit functions

78. Description Executive Directors Non Executive Directors
Normally / Generally Paid (ON payroll of
Company)
unpaid
Powers Dependent to Baord Independent to Board
Devotion Work -full time Normally do not work full
time
Involvement in
Management affairs
More Less
Directors Though Appointment Generally by election

79. Items mentioned on Dividend warrant
• Gross amount of dividend
• Deduction of tax
• Deduction of Zakat
• Net Amount

80. When Change does not mean Change of Name
• Removal of Private Limited
• TCS (Pvt) Limited
– IF IT BECOMES Public Company it becomes TCS
Limited
• Addition of Private Limited
• Unilever Pakistan Limited is a public Company
– If it becomes private company it becomes Unilever
Pakistan (Private) Limited

81. Description Executive Directors Non Executive Directors
Normally / Generally Paid (ON payroll of
Company)
unpaid
Powers Dependent to Board Independent to Board
Devotion Work -full time Normally do not work full
time
Involvement in
Management affairs
More Less
Directors Though Appointment Generally by election

92. •Resolution