KARACHI, May 19: Taking a swift action, the front-line regulator - the Karachi Stock Exchange - has sought comments from Dewan Mushtaq Group on the group's agreement to purchase substantial shares in two listed entities:
Pakland Cement Limited and Saadi Cement Limited. The KSE also mentioned the group's offer to acquire shares in Pakland from the public.
In one of three notices issued and announced at the stock exchange on Wednesday, the KSE states: "Without prejudice, we would like to inform you that Dewan Mushtaq Group is not a legal entity and the status and identification of its sponsors needs to be clarified."
The bourse reminded the group's CEO that under section 4 of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, any person who acquired more than 10 per cent but less than 25 per cent shares of a listed company was required to disclose his acquisition to the company and the stock exchange.
Moreover, under section 6 of the Ordinance, a person intending to acquire more than 25 per cent but less than 51 per cent shares of a listed company was required to make a public announcement of offer to acquire shares and a copy of proposed announcement was to be provided to the SECP and the concerned stock exchange.
The bourse observed that a number of companies of the group were listed on the KSE and acquisition of shares of Pakland/Saadi Cement Limited by Dewan Mushtaq Group, would have its impact on prices of shares of group companies.
KSE said that it being material information, should have been communicated by the listed companies separately, as required under the Code of Corporate Governance of the Listing Regulations of the Exchange.
"We would further like to advise that both Pakland Cement Limited and Saadi Cement Limited have failed to register transfer of a large number of shares purchased by various investors/members of the Exchange for lawful consideration from the stock market despite the order of the Hon'ble High Court of Sindh," wrote the KSE and added: "Accordingly the Exchange issued notices to these companies and has instituted legal proceedings against these companies for contempt of court orders, which are still pending."
The bourse, therefore, advised the Group to explain the above, immediately and also send attested copies of the resolutions passed by the Board of Directors of the group companies along with copy of the agreement as referred in the group's letter (dated May 17, 2004) with details of the shares of both the companies (including the number of shares and date of acquisition) that had been purchased by the sponsors of Dewan Mushtaq Group, by separately indicating the name of each company of the group or individual who had acquired those shares.
Two separate letters were also sent and notified at the trading hall by the KSE. The letters have been addressed each to Pakland Cement Limited and Saadi Cement Limited on the subject of "non- reporting of material information to the KSE under listing regulations."
The bourse told the companies that the Dewan Mushtaq Group through their letter dated May 17, 2004 had informed the KSE that "certain sponsor shareholders of the Group" had entered into an agreement to purchase about 34.575 million shares of Pakland Cement, which constituted about 42 per cent of the company's paid up capital and 36.175 million shares of Saadi Cement Limited, which constituted about 20 per cent of that company's paid up capital.
The bourse stated: "This quantum of shares, which may result in a major change in management/directorship of the company and may also have an impact on the price of shares of the company in the stock market".
Attention of both companies was drawn to Regulation 28 of the Listing Regulations of the Exchange, which, among others, required listed companies to immediately inform the Exchange about any material change in its nature of business, including change of management.
The bourse observed that non-reporting of that material information to the Exchange prima facie constituted violation of the provisions of Listing Regulations by the companies and requested both companies to provide "comments" on the matter.
