Legal Opinion regarding appointment of the Chief Executive Officer of Company 1 as ex-officio member of the Board of Company 2.

Mr. Z

Address….

Dear Sir,

Re:      Legal Opinion regarding appointment of the Chief Executive Officer of Company 1 as ex-officio member of the Board of Company 2.

We refer to your letter dated 23 October 2007 on the above subject.

Apollo Hospitals Dhaka is owned by Company 2 (“COMPANY 2”).

From perusal of your letter, it appears that Mr. x has recently joined Company 1 as its Chief Executive Officer to look after the total operation of the Hospital. The Management of COMPANY 2 has proposed that Mr. x be made an ex-officio member of the Board of Directors of COMPANY 2 and a resolution to that effect be passed in the next meeting of the Board.

In the above circumstances, you have requested us to give our legal opinion as to whether designating Mr. x as an ex-officio member of the Board of COMPANY 2 is permissible under the Companies Act 1994 and the Articles of Association of COMPANY 2.

OPINION:

Generally, the carrying on of the business of a company is the responsibility of the directors of that company and decisions are made by the directors by passing of resolutions at board meetings through a process of voting.

Article 132 of the Articles of Association of  COMPANY 2 states as follows:

“The Directors may meet together for the dispatch of the business of the Company and may adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be decided by a simple majority of votes…”

Therefore, the responsibility of dispatching the business of the company lies with the directors of COMPANY 2 though in accordance to the provisions of the Articles they may delegate various part of their functions to their various employees. Only directors of the board have voting power to pass any resolution in the meetings of directors.

Mr. x is the Chief Executive Officer of COMPANY 1 one of the business concerns of COMPANY 2 but he is not a Director of COMPANY 2. We have been informed that COMPANY 2 has a Managing Director entrusted with the substantial powers of management.

There is no provision under the relevant laws of Bangladesh under which the CEO of a unit of a Company may hold the position of a member of the Board of Directors by virtue of his right of office. Moreover, there is no provision under the Articles of Association of COMPANY 2 which allows the same.

Therefore, Mr. x may attend the Board Meetings upon invitation of the board of directors whenever any agenda regarding COMPANY 1 needs to be resolved. However, Mr. x will not be able to vote in the Board Meetings of COMPANY 2.

If you have any further query, please do not hesitate to contact the undersigned.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists Company 2”

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