When people start a private limited (Pvt Ltd) company in Pakistan, they often wonder what their legal titles should be. Are they directors? Are they CEOs? Does the law even recognize a CEO? This article explains all of that in simple language so you clearly understand how company roles work in Pakistan.
1. Who Are the Founders of a Pvt Ltd Company?
When two or three people start a Pvt Ltd company in Pakistan, they are founders, but legally they become:
- Shareholders (owners)
- Directors (managers at the board level)
These roles are separate, even if the same people hold both positions.
For example:
If Ali, Sara, and Hamza start a company together, they will each own shares (making them shareholders) and can also be appointed as directors in the company.
2. Who Is a Director?
Legally, a director is someone appointed by shareholders to manage and supervise the company. Even if you founded the business, you are not automatically a director—you must be appointed through the legal procedure.
Basic requirements to be a director include:
- Must be at least 18
- Must not be bankrupt
- Must not be convicted of fraud
- Must have a valid CNIC or passport
The Companies Act 2017 governs all director-related rules in Pakistan.
3. What Does a Director Do?
Directors are responsible for the major decisions of the company. Their key duties include:
a. Setting company direction
- Approving business strategy
- Deciding expansions or product launches
- Approving loans or investments
b. Ensuring legal compliance
Directors must ensure the company:
- Files documents with SECP
- Pays taxes
- Maintains accounts
- Follows all regulatory requirements
c. Acting honestly
They must act in the company’s best interest, avoid conflicts of interest, and protect company resources.
4. How the Role of CEO Fits In: Is It a Legal Position?
Here’s the part most people don’t know:
✔ Legally, the Companies Act does NOT require a company to have a CEO.
✔ But companies ARE allowed to appoint a CEO if they want.
A CEO is an operational role, not a legal requirement.
The CEO runs the day-to-day operations of the business. But their authority must come from the Board of Directors, meaning the directors appoint the CEO and define what powers the CEO has.
If the founders want, one of them can become the CEO, but this:
- Does not replace the role of director
- Does not change their responsibilities as a director if they are both CEO and director
For example:
If Sara becomes the CEO, she can run daily operations, but she will still answer to the board (which may include Ali and Hamza).
5. So What Are the Legal Roles When People Start a Pvt Ltd?
When two or three people start the company, they automatically fall into these categories:
1. Shareholders (Owners)
- They own shares in the company
- They have voting rights
- They can appoint or remove directors
2. Directors (Board-Level Managers)
- They make major decisions
- They supervise the company
- They appoint the CEO or MD (if needed)
3. CEO / Managing Director (Optional Operational Role)
- Not required by law
- Appointed by the board
- Handles daily business operations
So legally, the main mandatory role is:
➡ Director
CEO is optional.
6. Can One Person Be a Director, Shareholder, and CEO at the Same Time?
Yes, especially in small companies.
A founder can be:
- A shareholder
- A director
- The CEO
This is very common in startups and small businesses.
7. Conclusion
In a private limited company in Pakistan, the legally recognized and mandatory position is that of director. Founders usually become both shareholders and directors. The CEO role is optional and exists only if the board chooses to create it. Understanding these roles helps new entrepreneurs set up their company properly and avoid confusion later on.
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