The Securities and Exchange Commission of Pakistan (SECP) has imposed a fine of Rs 500,000 on an insurance company for not complying with the provisions of Insurance Ordinance, 2000. In this connection, the SECP has issued an order here on Friday. According to the SECP, the order has disposed of the proceedings initiated against an insurance company for not complying with the provisions of Section 28 and Section 11(1) of the said Ordinance.
The provisions of Sub-Section (l)(a) of Section 11 of the Ordinance provide that: "Conditions imposed on registered insurers. An insurer registered under this Ordinance shall at all times ensure that: (n) the provisions of this Ordinance relating to minimum paid-up share capital requirements are complied with;" The relevant provisions of Section 28 of the Ordinance provide that "Requirements as to capital.-(1) An insurer registered under this Ordinance to carry on insurance business shall have a paid-up capital of not less than the required minimum amount.
For the purposes of this section, the required minimum amount is:
(a) Rs 150 million, or such higher amount as may be prescribed by the Federal Government, for an insurer carrying on life insurance business; and
(b) Rs 80 million, or such higher amount as may be prescribed by the Federal Government, for an insurer carrying on non-life insurance business;"
The Notification SRO 291(1)/2007 dated March 26, 2007 requires every insurer, registered under the Ordinance, to raise its paid up share capital in the manner given hereunder, which is stated against the status of the Company's paid up share capital on the given deadline. In view of the above, it appeared to the commission that the company has contravened the provisions of section 28 and section 11(1) of the Ordinance read with SRO 291(1)/2007 relating to the requirements of paid up share capital for the insurers registered under the Ordinance, for which the Company may be punished under Section 63(1) or Section 156 of the Ordinance, SECP said.
The SECP said the company and its directors had failed to perform their duties with due care and prudence. As the directors are supposed to be well-aware of their legal obligations in connection with the aforesaid statutory requirement of Section 28 and Section 11(1) of the Ordinance, therefore, it could be legitimately inferred that the default was committed knowingly, and that a considerable time was gained in attempting to ensure compliance of the said requirement of the law.
After carefully examining the arguments and studying the facts and findings of the case, the defaults under Section 28 and Section 11(1) of the Ordinance are established. Therefore, the penalty as provided under Section 156 of the Ordinance can be imposed onto the Company, its Directors and/or its Management.
The SECP instead of imposing the maximum penalty as provided therein, take a lenient view, and thus, impose a fine of rupees five hundred thousand only (Rs 500,000) onto the Company due to the reasons that the basis for default was laid down by the previous Board of Directors of the Company and that the current directors have now complied with the minimum paid up capital requirements. Also, the company is hereby issued a stern warning that in case of similar non-compliance in future a stronger action against the company will be taken, SECP added.
Comments
Comments are closed.