Appointing new directors: insurance companies required to obtain SECP's approval

The Securities and Exchange Commission of Pakistan (SECP) has declared that the insurance companies are required to obtain approval of the Commission before appointing the new directors.
According to an order issued by the SECP Insurance Division against an insurance company here on Friday, the insurance companies were required to obtain the approval of the Commission before appointing the new directors to fill up the casual vacancies, however, at least duly completed application should be filed for consideration and approval of the Commission prior to their appointment. But, the insurance company did not provide complete information / documents despite two letters of the Commission (ie letter of March 27, 2015 and a reminder letter dated September 7, 2015), whereby the company was advised to file complete application and submit all the documents / information, which were required to be filed much earlier.
It is inferred that the company has not only contravened the provisions of law, as aforesaid, by not seeking approval of the Commission before appointing the directors, but have ignored the Commission's express demand to file a duly completed application for consideration and approval of the Commission. Moreover, the company's officials have themselves stated during the course of hearing that since all the directors of the company are transporters and that they do not fulfil the requirements of the regulator, so it would be worthless to seek approval of the Commission on something the company knows that its directors do not comply with, which means that the default on part of the Respondents was deliberate and wilful.
The company sent a letter dated February 2, 2015, whereby certain documents/ information were filed before the Commission to seek approval of the Commission to appoint new directors on the basis of that incomplete application. The company also mentioned that the persons appointed as directors were the only willing members who gave their consent to act as directors of the Company, as and when casual vacancy arose during the years 2012 and 2013. The company stated that the Company was constrained to appoint only those persons to act as directors who gave their consent, in order to meet the requirement of minimum number of directors as laid down in the Articles of the Company.
The SECP has carefully examined and given due consideration to the written and verbal submissions of the company and have also referred to the provisions of the Regulation, the Ordinance and other legal references, the SECP is of the view that the default of Regulation 2(2) of the Regulations read with Section 11(1)(f) and Section 12 is established. Therefore, the fine as provided under Section 156 of the Ordinance can be imposed onto the Respondents ie the Company and the so-called directors of the Company.
In exercise of the power conferred on me under Section 156 of the Ordinance read with S.R.O. 221(1)/2015 dated March 11, 2015, I, instead of imposing the maximum fine as provided under the said Sections, taking a lenient view, imposed a fine of Rs 10,000 on each of the respondent directors and Rs 100,000 on the Company, due to the wilful default of Regulation 2(2) of the Regulations, and Section 11(1)(f) and Section 12 of the Ordinance, as mentioned hereinabove. The Respondents are further directed to ensure full compliance with the Ordinance, rules, regulations and directives of the Commission in future.
Hence, all the Respondents are hereby directed to deposit the applicable fine in the designated bank account maintained in the name of Securities and Exchange Commission of Pakistan within thirty (30) days from the date of this Order and furnish receipted vouchers issued in the name of the Commission for information and record. In case of failure to comply with this Order, the Commission shall be bound to initiate proceedings under Section 63(2)(d) and / or Section 65 of the Ordinance. However, in case any wilful misstatement in the submissions made by the Respondents, the Commission shall initiate proceedings under Section 158 of the Ordinance, SECP added.