Securities Act 2015: Sections 220 to 224 of Companies Ordinance stand repealed

With the promulgation of the Securities Act 2015, the sections 220 to 224 of the Companies Ordinance 1984 stand omitted/repealed, says Securities and Exchange Commission of Pakistan (SECP) here Wednesday. The section 222 deals with the submission of statements of beneficial owners of listed securities; section 223 is related to the prohibition of short-selling and section 224 deals with the trading by director, officers and principal shareholders.
According to an order issued by the SECP, it seems necessary to mention that subsequent to receipt of aforementioned reply, the Parliament approved new enactment titled as Securities Act 2015 and this Act of the Parliament received assent of the President of Pakistan on May 13, 2015. With the promulgation of the Securities Act 2015, section 220 to 224 of the Ordinance stand omitted/repealed. Since all proceedings were completed prior to promulgation of the Securities Act 2015, therefore, the matter is being disposed of pursuant to omitted provisions of Section 224(4) of the Companies Ordinance, 1984.
The SECP order has disposed of the proceedings initiated under Section 224(4) of the Companies Ordinance, 1984 by the SECP through Show Cause Notice issued to the director of a petroleum company.
Section 222(2)(b) of the Ordinance stipulates the period within which the Form 31 is required to be submitted as under:- "in any other case, including a case where the company is listed on the stock exchange after the commencement of this Ordinance or after the person has occupied the position or office specified in sub-section (1) or has acquired interest as beneficial owner of securities as aforesaid, within thirty days of occupying the office in the company or acquisition of interest as beneficial owner requiring submission of the return aforesaid or listing of the company on the stock exchange, as the case may be.", it added.
The Respondent (director of company) in response to SECP letter dated 23/02/2015 filed Form 31 with this Commission on 11/03/2015, which showed that the Issuer Company was formally listed at Karachi Stock Exchange on 14/05/2014. Thus, the Respondent was required to file the said return with this Commission within 30 days of the listing of the Issuer Company ie latest by 13/06/2014, but the same has been filed on 11/03/2015, with delay of 271 days, in contravention of Section 222(2)(b) of the Ordinance.
The aforesaid contravention prima facie attracts penal provision of Section 224(4) of the Ordinance. The Commission took cognisance of the aforesaid default and issued Notice to the Respondent under Section 224(4) of the Ordinance, calling upon him to explain through written reply along with documentary evidence, if any as to why action may not be taken against him pursuant to Section 224(4) of the Ordinance, for aforesaid contravention of Section 222 of the Ordinance. Furthermore, personal hearing in the matter was also fixed on 08/05//2015 at Commission's Head Office, Islamabad.
Chief Executive Officer of the Company responded the Notice on behalf of the Respondent vide letter dated 05/05/2015 and communicated that the matter may be decided by considering the written submissions. The SECP has considered the aforesaid submissions made on behalf of the Respondent. The Respondent has stated that he has been working as Director of the Issuer Company before its listing at the stock exchange. The Respondent has admitted the default with the contention that the same was not committed wilfully and knowingly the SECP has reviewed the record of this office at Karachi Stock Exchange on 14/05/2014. The Respondent has sold 200,000 shares of the Issuer Company on 03/02/3015 and observed that the Company was formally listed inter alia at Karachi Stock Exchange on 14.5.2014. The Respondent has sold 200,000 shares of the issuer company on 3.2.2015 and Form 32 in this regard was filed with the Commission within the stipulated time limit.
The Respondent, being a Director of a newly listed company as well as considering the submissions made by him, SECP intend to agree with the contention of the Respondent and of the view that late filing of said return may not be wilful. Therefore, a lenient view of the matter has been taken and the Respondent is hereby strictly warned to ensure timely compliance of Section 222 of the Ordinance in future, the SECP added.