ISLAMABAD: The Islamabad High Court has fined two companies involved in illegal deposit-taking activities through social media campaign to collect deposits from the general public and the small investors.

The two companies -Shaukat Marwat Group of Companies (Private) Limited and ShaukatMarwat Estates & Builders (Private) Limited, were imposed penalties of Rs50 million and Rs10 million respectively by the Securities and Exchange Commission of Pakistan (SECP).

ShaukatMarwat Group of Companies (Private) Limited and ShaukatMarwat Estates & Builders (Private) Limited filed appeals against the penalties imposed by the Appellate Bench of the SECP in March, 2022.

The SECP had also directed the two companies to unwind the unlawful transactions of deposit taking. However, the companies filed appeals against the orders of the SECP Appellate Bench at Islamabad High Court.

After multiple hearings the Court dismissed these appeals by determining that the submissions made by the two companies were misconceived and without merit.

The SECP had conducted a thorough investigation against the two companies for the alleged violations of the applicable laws and the Show Cause Notices were issued against these companies on July 13, 2021 under Section 84 of the Companies Act, 2017.

While, presenting its case in the high court the SECP asserts that has been informed to the public that mere registration of a company with the SECP does not authorise it to seek deposits from the general public.

The deposit-taking by companies, other than banking companies and entities duly licensed by the SECP, is illegal under Section 84 of the Companies Act, 2017.

Published in Dawn, June 6th, 2024