In April 2011, Arif was appointed as the chief executive of Nice Sugar Mills Limited (‘NSML’), a public unlisted company, by the board of directors of NSML (‘Board’). Clause 3 of his contract with NSML (‘Contract’) provides as follows: ‘The appointment shall be for a fixed term of three years starting from April 2011 and shall not be terminated before expiry of the aforementioned three years’. In October 2011, some members of the Board discovered evidence that Arif had been withdrawing large sums of money from NSML’s bank account and using it for financing his son’s new business. They want to seek Arif’s removal as the chief executive. The Board comprises twelve members, six of whom are currently out of Pakistan. The six directors present in Pakistan want to meet immediately to remove Arif. Some Board members are of the view that due to Clause 3 of the Contract, Arif cannot be removed before the expiry of his term.Required:Under the Companies Ordinance 1984, advise the Board on the possibility of, the procedure for, and the consequences of, Arif’s removal as the chief executive of NSML. (10 marks)
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