October 10, 2001	Wednesday	Rajab 22, 1422

ISLAMABAD, Oct 9: The Securities and Exchange Commission of Pakistan (SECP) has detected a dubious transfer of over Rs30 million from the accounts of a public limited company and recovered over Rs26 million belonging to the shareholders.

Remaining over Rs4 million besides another Rs14 million of mark-up accumulated at an interest rate of 19.42 per cent would be paid within three months to shareholders under an agreement between the Associated Industries Limited and the SECP.

An announcement of the enforcement division of the SECP said here on Tuesday that auditing of Associated Industries Limited (AIL) ending year 2000, disclosed that Rs30.127 million was shown as receivable by the company under the head “loans and advance others” from its associated company, Quality Food Products (Pvt) Limited, in contravention of the provisions of clause (c) of sub-section (i) of section 195 of the Companies Ordinance 1984.

The company was asked to provide copies of the current account of the associated company for the year ended June 30, 2000, that were supplied by the company with the contention that the balance of the associated company represented regular business transactions. It said the company had not given any cash advance or loan to the associated company during the year.

It was, however, detected after scrutiny by the SECP that the company had provided an amount of Rs50.946 million to Quality Foods in July 1999, but later reduced to Rs30.127 million as on June 30, 2000 through various expenses incurred by the associated company on behalf of the parent company. No documentary evidence was, however, provided to substantiate the contention that the balance due to or from the associated company was a normal business transaction.

The company’s counsel later admitted the default during the hearing and agreed to rectify the same in accordance with the direction of the commission.

To ensure return of the shareholder’s money with mark-up, the company was asked to rectify the default within 30 days by arranging refund of Rs30.127 million along with mark-up that must not be less than borrowing cost of the company.

The company has now confirmed before the SECP that it has recovered a sum of Rs26.354 million from the associated company and an amount of Rs3.773 million was outstanding as on September 12, 2001, which along with mark-up at 19.42 per cent may be allowed to be recovered within three months time. The time was granted in view of substantial recovery of Rs26.354 million.