Structuring executive severance agreements, change-of-control golden parachutes, and shareholder approval mechanisms under the Companies Act 2017.
Section 172 of the Companies Act 2017 prohibits the payment of compensation for loss of office or retirement to any director (including the Managing Director or Chief Executive) unless full particulars are disclosed to shareholders and approved by a general meeting resolution. Agreements attempting to circumvent Section 172 through unapproved private contracts are legally unenforceable.
During corporate takeovers or conglomerate restructuring, executive change-of-control clauses provide critical leadership continuity. Structuring double-trigger golden parachutes (requiring both an acquisition and subsequent involuntary termination) protects executive talent while aligning with SECP Listed Companies regulations.
Terminal executive severance payments are subject to withholding tax under Section 149 of the Income Tax Ordinance 2001. Under Section 12(6), executives may elect to have golden handshake payments taxed at the average rate of tax of the three preceding tax years, providing material tax optimization for departing leadership.
Engage The Recruiters Lounge to structure compliant C-suite compensation packages, executive severance covenants, and statutory benefit trusts.
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