ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has reminded companies that directors of the companies are required to exercise the utmost care in making business decisions in order to fulfill their fiduciary duties.
This message has been conveyed by the SECP to the corporate sector while deciding a case against a registered company.
According to an order issued by the SECP against a flour mill, “the company” had failed to file its audited financial statements for the year ended 2023 with the “Registrar” within the stipulated timeline, pursuant to Section(s) 233 of “the Companies Act”. The company had contravened the aforesaid provisions of “the Act” and rendered the company liable to a penalty of level-i on the standard scale, as provided under Section 233(4) read with Section 479 of “the Act”.
Consequently, the aforesaid SCN dated February 07, 2024 was issued to “the respondents” to show cause in writing as to why penal action as enunciated under Section 233 (4) read with Section 479 may not be taken against the company, for failing to conform to the provisions of Section(s) 233 of “the Act “, ibid.
The SECP decided that considering the facts on the case, proceedings and other record presented before he SECP and decided the case as (“the company”) has complied with the mandatory requirements of Section 233 of “the Act,” during the pendency of the adjudication and the same fact has been verified by the dealing registrar CCD, Faisalabad. Before proceeding
with the decision, the SECP I would also like to highlight that directors of the company are required to exercise the utmost care in making business decisions in order to fulfill their fiduciary duties. Duty of care requires directors to make business decision after considering all available information, requirements of laws/regulations with regard to operations of the company and then act in a judicious manner while promoting the company’s best interest.
However, the SECP has gone through the facts of the case as the company has complied with the requirements of Section 233 of “the Act” during the adjudication proceedings, therefore, the SECP, while exercising the powers delegated vide S.R.O. 1546 (1)/2019 dated December 06, 2019, hereby condone penalty, with a “warning” to the company and its chief executive/director(s) for future adherence to the law, in letter and spirit, to conclude “the SCN,” the SECP added.
Copyright Business Recorder, 2025
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