ISLAMABAD: K-Electric (KE) is reportedly unable to reconstitute its Board as per Power Division’s recommendation, saying that orders of Sindh High Court (SHC) and directions of Securities and Exchange Commission of Pakistan (SECP) do not allow any change in the BoD, well informed sources told Business Recorder.
Power Division, sources said, in a letter of May 31, 2023 notified fresh nominations of Board of KE on behalf of Government of Pakistan.
KE’s Company Secretary, Rizwan Pesnani in response to the letter of Power Division has shared legal position of the company.
He drew the attention of Power Division to the current legal situation surrounding KE’S Board considering the ad-interim Order of October 21, 2022, passed by the High Court of Sindh in Suit No.1731 of 2022, Al Jomaih Power Limited & another vs. IGCF SPV 21 Limited & others and the direction of November 8, 2022, issued by the SECP.
According to KE’s Company Secretary, the ad-interim Order of October 21, 2022, which is currently in the field, expressly prohibits, without limitation, any changes in the present Board of Directors of KE. Similarly, the SECP’s Direction under Section 125 of the Securities Act, 2015 has also directed that the composition of the current Board shall not be changed until further orders from the Commission. KE has shared copies of the SHC’s Order along with SECP’s direction.
KE’s Company Secretary, in his letter, also explained that KE’s Board comprises of 13 directors, and presently, three casual vacancies on the Board could not be filled given the said Order and direction, and thus, KE’S Board has been operating at less than its full strength.
“The operative nature of the Order/ direction, implementing the fresh nominations on KE’s Board at this time would violate the Sindh High Court’s ad-interim Order and the SECP’s direction unless any clarification or modification is provided by the High Court of Sindh and the SECP,” Pesnani said adding that KE management is relying on the opinion of two top-tier legal firms, M/s Mohsin Tayebaly & Company and M/s Haidermota & Company.
The Company Secretary showed his intention to meet the concerned Officer of Power Division and Legal Department/ Attorney General’s office to explain the basis on which this opinion is arrived at.
“We understand the significance of the Government of Pakistan’s role as a shareholder; therefore, we will inform you of any further developments,” said Pesnani in his letter.
In December 2022, the Federal Cabinet had approved the name of Nasir Mahmood Khosa, former Federal Secretary as Non-Executive Member of Board of Directors (BoD) KE, in addition to Secretary Power Division and Secretary Finance Division as ex-officio Directors.
Last month, Additional Attorney General for Pakistan Rashdeen Nawaz Kasuri had proposed that a clarification be sought in Order of Sindh High Court (SHC) of October 21, 2022 on petition titled Al-Jomaih Power Limited and others versus I.G.C.F SPV 21 Limited and others in the Sindh High Court (SHC), well informed sources told Business Recorder.
Additional Attorney General for Pakistan had been requested to give legal opinion on the matter as to whether the Division could notify any change in the GoP-nominated directors in K-Electric Board of Directors, subsequent to the approval of the Federal Cabinet.
AAG in his letter had explained that he prepared a proactive opinion; however, after consulting the then Attorney General for Pakistan it was decided that the matter be taken up before the concerned High Court.
“The matter has been pending since long and for the last many months the case has not been fixed before the Court. In Order of October 21, 2022, the Court had ordered that no change shall be effected in the present Board of Directors of defendant number, i.e., K-Electric,” the sources quoted Additional Attorney General for Pakistan as saying in a letter to Power Division.
According to Additional Attorney General of Pakistan, counter affidavits were filed by the parties. In para-4 at page-3, SECP mentioned that a direction was issued by it on November 08, 2022 to the effect that no change is to be effected to the Board of Directors of Defendant number four.
Additional Attorney General of Pakistan maintained that it is quite certain that the direction was not meant to include the nominees of the Government. However, he had advised that a letter in this respect be obtained from the SECP that their direction in no manner was meant to effect the Government of Pakistan nominated Directors.
He suggested that the Court holidays would commence soon and if a clarification is desired in Order of October 21, 2022 passed by the High Court of Sindh at Karachi, an application is required to be prepared and filed in the Court at earliest possible time.
Copyright Business Recorder, 2023
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