Law: Companies Ordinance, 1984

Section: 184

  Companies Ordinance (XLVII of 1984)-- ---S.184--Words, "persons appointed as Directors"--Connotation--Expression includes persons elected as Directors and thus S.184 would be applicable to the persons who have been elected as Directors of the Company.--[Words and phrases]. Companies Ordinance (XLVII of 1984) ---Ss.184 & 186--Nature of provisions of S.184, Companies Ordinance--Obligation of the Directors and the Company--Doctrine of indoor management, its aim and object--Removal of one set of Directors by the other set of Directors--Validity- Effect. A bare reading of section 186 of the Companies Ordinance which is penal and vindicatory clearly shows that provisions of section 184 arc mandatory in nature and the word "shall" used therein is not a mere precatory word but of command. Section 184(1) envisages two stages. Firstly, it is imperative for Directors appointed or nominated to tile consent to act as directors. Secondly, it is obligatory upon the company that their consent be filed by the Company "with the Registrar before such appointment or nomination or being described or named as a director or proposed director or chief executive or proposed chief executive of the company, as the case may be". Besides the doctrine of indoor management aims at efficacious and smooth running of the affairs of the company by necessary implication also casts upon those at the helm of administration a duty to call upon the directors appointed, elected or nominated to file their consent in writing in case no such consent is forthcoming. The bad, faith of the respondent Directors is evident from the fact that no show cause was given by them before the so-called decision of removal was made by them against the applicant directors at the Board's meeting. In doing so, the respondent Directors overlooked the provisions of section 185 of the Ordinance which purport to rectify any act of a director on the ground of defect subsequently discovered in his appointment to his office. The language of section 186 of the Ordinance is unambiguous and empowers the Corporate Law Authority only to impose penalties including debarring the directors…