ISLAMABAD, June 28: The Securities and Exchange Commission of Pakistan (SECP) took action against 16 companies last month for violation of different legal requirements including delay in holding of annual general meetings and late circulation of quarterly accounts.

An official announcement issued here on Tuesday said out of the 16 companies five were fined Rs525,000 for delay in holding of annual general meetings. Another four companies were fined Rs275,000 for non/ late circulation of quarterly accounts.

Similarly, a penalty of Rs250,000 was imposed on a company for invalid investment in associated undertakings; the investment was made on the basis of nine-year-old resolution that was not bringing any return to the shareholders.

The SECP also ordered an investigation into the affairs of a company as it was not being managed in accordance with the sound business principles, prudent commercial practises and good corporate governance thus depriving the members from reasonable return. Moreover, the company was suffering losses endangering its solvency. Show cause proceedings were also initiated against the same company for non-circulation of quarterly accounts.

In once instance, a company was advised to defer acquisition of ordinary or preference shares of its subsidiary company or providing subordinated loans or extending guarantees to the creditors of the subsidiary company. The action was warranted since the company itself was uncertain about the mode of investment; exact amount of investment; time frame of investment; and return to be charged on the same investment.

The SECP also initiated show cause proceedings against two audit firms for non-compliance with the provisions of Section 255 of the Companies Ordinance, 1984. The audit firms had failed to discharge their duties and responsibilities in accordance with the statue.

Moreover, show cause proceedings were initiated against eight companies for various reasons including making unauthorized advances to associated companies, non-holding of annual general meetings, non-circulation of quarterly accounts, non-issuance of duplicate shares, non-payment of dividends within prescribed period, non-appointment of full time company secretary, late submission of cost audit report and non-communication of decision of directors to issue bonus shares to the SECP on the day of decision along with auditor’s certificate.

During last month, the commission resolved 159 out of 181 complaints of various shareholders, while the remaining complaints were at various stages of process. The complaints were mainly related to non-receipt of dividend warrants, non-encashment of dividend warrants, delay or non-transfer of shares and issue of duplicate shares, non-receipts of annual and interim accounts and wrongful deduction of Zakat.