ISLAMABAD, July 15: The Enforcement Department of the Securities and Exchange Commission of Pakistan (SECP) has identified 25 cases of violation of legal requirements by companies last month and took actions against them and their auditors.
According to official record for June 2005 released here on Friday, of the 25 cases, penalties were imposed in nine cases by the Enforcement Department of the commission while show cause proceedings were initiated in the remaining.
Seven companies — M/s Zahur Textile Mills Limited, M/s Service Fabrics Limited, M/s Dewan Cement Limited, M/s Dewan Hattar Cement Limited, M/s Telecard Limited, M/s Pakistan PVC Limited and M/s Wali Oil Mills Limited were penalized for late/non-holding of annual general meetings and non-circulation of quarterly accounts.
Fine was imposed on M/s Haseeb Waqas Sugar Mills Limited for payment of dividend out of capital of the company, in violation of legal provisions. The company was also directed to make good the loss of capital of Rs5.284 million by recovering the amount from its directors as the loss occurred due to their imprudent decision.
In another case, penalty was imposed on a partner of a firm of auditors for giving inaccurate and misleading audit report for the year ended September 30, 2004 in the case of M/s Al-Jadeed Textile Mills Limited.
During last month, a company intended to pass a resolution in the extra-ordinary general meeting for making investment in a company through its associated company, without disclosing necessary information in the notice of meeting.
The company was advised to disclose the information, as required under Section 208 of the Companies Ordinance, 1984, to shareholders by way of addendum to the notice of meeting to enable shareholders to take an informed decision.
In addition, the SECP initiated show cause proceedings against two audit firms for non-compliance with provisions of Section 255 of the Companies Ordinance. The audit firms failed to discharge their duties and responsibilities laid down in the statute.
Show cause proceedings have also been initiated against 14 companies for making unauthorized advance/loan from associated company, non-transfer of provident fund contribution as per the requirements of law, non-circulation of quarterly accounts, non-appointment of whole time company secretary and non-submission of explanation on cost auditor’s reservations made in the cost audit report within the prescribed period.
The Enforcement Department resolved 57 out of 215 investor complaints last month. Comments on remaining 58 complaints have been sought from the companies concerned. The complaints mainly related to non-receipt of dividend warrants, non-encashment of dividend warrants, delay/non-transfer of shares and issue of duplicate shares, non-receipt of annual and interim accounts, wrongful deduction of Zakat, and non-circulation of notice of meeting.
Efforts were also made to facilitate the companies and investors to promote efficiency in operations. In this regard, eight companies were allowed to place their quarterly accounts on their respective websites instead of circulating them among shareholders by post.
