The Securities and Exchange Commission of Pakistan (SECP) has issued show cause notices to six Modaraba management companies, chief executives and their directors to explain their position against the violations of Modaraba Ordinance, 1980 and Modaraba Rules during 2008-2009.
Sources told Business Recorder on Wednesday that the show-cause notices were issued under sections 19, 20, 21, 23, 32 of the Modaraba Companies (Floatation & Control) Ordinance, 1980 to Modaraba management companies during the period of July-June (2008-09) for the better implementation of Modaraba Law.
During the period under review, the Registrar (Modarabas) passed five orders under section 19, 20 and section 32 of the Modaraba Ordinance to the Modaraba Management Companies mainly pertained to severe violations of Modaraba Ordinance and Prudential Regulations, non-compliance of accounts, mismanagement of funds, non-compliance of reports and code of corporate governance upon which the penalties were imposed.
During this period, two registrations of the Modaraba Management Companies were cancelled/reregistered through the Orders of the Registrar (Modarabas). These companies were registered as far back as 1990 and had not floated a Modaraba as required under the law. After giving an opportunity of being heard, the managements did not express any intent to float a Modaraba, so the Registrar (Modarabas) issued Orders under Section 19 of the Modaraba Ordinance, 1980.
On site inspections under the section 21 of the Modaraba Ordinance were carried out to examine the affairs of 10 Modarabas. The sole purpose of these inspections was to gauge the true financial health, review performance of the management and the Board, and assess compliance with the prevailing regulatory framework.