The Securities and Exchange Commission of Pakistan (SECP) has passed 107 enforcement orders against the companies during January-October 31, 2008 under various provisions of the Companies Ordinance, 1984.
According to a press release of the SECP issued on Wednesday, the commission has taken punitive action against companies, who were not maintaining records, under Companies Ordinance. The timely regulatory actions taken by the SECP have resulted in increased compliance on part of the corporate and other sectors under its purview.
During the year 2008, the SECP authorised 19 inspections where it was suspected that substantial shareholders' interests may have been affected or where such activities were observed which were against the shareholders' interests. The inspections in some companies revealed instances where raw material worth millions was misappropriated under the disguise of impairment and series of suspicious transactions potentially leading to a concerted scheme aimed at striping off the company from its assets in a phased manner; premises of a listed company was leased without shareholders approval and rent was taken away by one of the directors; manufacturing facility was leased out and the rent was received by the associated concern; and funds raised through the issue of rights shares were funnelled out of the listed company by extending advances and loans to the directors, etc. While in another case, fake shares of a listed company are in circulation and proceedings are underway to get hold of those involved in this criminal activity.
The inspections of books of accounts also revealed that some of the companies were not maintaining basic statutory record, which includes fixed asset register, shareholders register, minute's books of directors/shareholders meeting and books of accounts of the company. In order to improve compliance, punitive action has been taken against such companies, under the relevant provisions of the Companies Ordinance, 1984.
As a result of inspections, further proceedings under Section 263 of the Companies Ordinance, 1984 have been initiated against certain companies. However, some companies have resisted the inspection orders of SECP and have filed appeals.-PR