The Securities and Exchange Commission of Pakistan (SECP) has completed proceedings against nine companies for improper issue, circulation or publication of balance sheet or profit-and-loss account and penalties were imposed on certain companies during 2009-2010 under the Companies Ordinance.
According to the recently issued SECP Annual Report-2010, the commission has elaborated the enforcement measures taken against the non-compliant companies or those violated the provisions of the Companies Ordinance. The action has been taken against the companies for committing different kinds of violations of the relevant laws.
The SECP annual report said that the commission responsible to identify complex and unlawful inter-corporate financing in violation of section 208 of the Ordinance. Necessary steps were taken to discourage misuse of company funds, unauthorised investments by companies in associated undertakings, non-receipt of trade debt and non-charging of any interest on the amount advanced to the associated companies. Sixty-one-cases of 32 listed and 29 unlisted companies were adjudicated and the proceedings in 27 cases were completed. The directors of 21 companies were fined and 6 were warned for their professional misconduct. The proceedings in 33 cases are being finalised.
On the issue of making of False/Incorrect Statements in Documents, the SECP has started proceedings in 37 cases of false/incorrect statements made by companies and 21 such cases were concluded and directors of 18 companies were penalised under section 492 of the Ordinance. Warnings were issued to 2 companies and one of them made adequate amendments to ensure complete disclosure.
In cases of consolidated financial statements, the proceedings were initiated against 2 listed and 5 unlisted companies, failing to comply with section 237 of the Ordinance. The directors of a company were fined, while the cases of the remaining companies are in process.
The report said that the proceedings were initiated against the companies that failed to treat the surplus on revaluation of fixed assets as per requirements of section 235 of the Ordinance. Ten such cases were identified and the directors were penalised in 4 cases.
The SECP also investigated the improper issue, circulation or publication of Balance Sheet or Profit-and-Loss Account. The proceedings were started against 9 companies for improper issue, circulation or publication of balance sheet or profit-and-loss account as required under section 244 of the Ordinance. Penalties were imposed in 4 cases while 1 case is being finalised. Four companies were directed to ensure strict compliance of laws and regulations in future.
The proceedings were carried out against 2 companies that failed to maintain the register of members. The directors of a company were penalised while those of the other were warned, SECP said. In cases of non-circulation of Quarterly Accounts, 52 proceedings were initiated against the companies for non-circulation of quarterly accounts. Twenty-five proceedings were concluded wherein directors of 17 companies were penalised for non-compliance and 8 were warned. The Enforcement Department''s efforts resulted in 79 percent compliance by the listed companies in case of circulation of quarterly accounts.
The report said that the SECP has initiated proceedings against 17 listed companies on account of late and non-holding of AGM. The directors of 7 companies were penalised while those of 1 company were warned. Nine cases are being finalised.
Most of the listed companies published their notices of Extraordinary General Meeting (EOGM) and AGM in the newspapers as required by the law. The violations by 2 companies were identified where 1 company failed to publish its AGM notice in the papers and the other failed to submit its AGM notice to the National Investment Trust. Both companies were warned for their defaults and directed to abide by the law. Twenty listed companies were directed by the SECP to hold overdue AGM.
The proceedings were initiated against directors of 4 companies failing to comply with the SECPs direction under section 170 of the Ordinance to hold overdue AGM. Companies were penalised in 2 cases, SECP report said.
The SECP further stated that during the review of notices of special business, 20 instances of non-compliance with section 160 of the Ordinance were found wherein vital information was either deficient or missing in notices of AGM/EOGM. All of the companies were directed to circulate relevant information to the shareholders by way of an addendum. Furthermore, proceedings against the directors of 6 companies were initiated for not disclosing the material facts along with the notice of AGM/EOGM. Warnings were issued to 3 companies while 2 cases are being finalised, SECP annual report added.
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