SECP issued 19 orders, initiated 23 cases against co-directors, auditors in June

The Securities and Exchange Commission of Pakistan (SECP) issued 19 orders, and initiated 23 show-cause proceedings against directors and auditors of listed/un-listed companies during June 2011, reflecting strict enforcement against non-compliant companies.
It was learnt here on Friday that during June 2011, as part of its enforcement and regulatory functions, the Enforcement Department of the SECP issued 19 orders and initiated 23 show-cause proceedings against directors and auditors of listed/un-listed companies. These enforcement actions mainly pertained to unauthorised inter-corporate financing, irregularities in provident fund, late/non-submission of quarterly accounts, late holding of annual general meeting, non-preparation of consolidated financial statements, misstatements of financial statements, non-appointment of independent share registrar and unauthorised utilisation of security deposits.
The Enforcement Department of the SECP is primarily responsible for monitoring and enforcing corporate compliance by the listed and unlisted companies (required to file accounts with SECP) of relevant laws ie, The Companies Ordinance, 1984, The Companies (Issue of Capital) Rules, 1996; Companies (Audit of Cost Accounts) Rules, 1998; The Companies Share Capital (Variation in Rights & Privileges) Rules, 2000; Companies (General Provisions and Forms) Rules 1985; Group Companies Registration Regulations, 2008; Listed Companies (Substantial Acquisition of Voting Shares and Take-overs) Ordinance, 2002) and Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008 and applicable accounting and auditing standards.
During review of notices of general meetings of listed companies, published during June 2011, 3 companies were advised to circulate deficient relevant information to the shareholders by way of addendums.
The department also resolved 61 investors' complaints during the month. These complaints mainly related to non-receipt of dividend warrants, non-encashment of dividend warrants, delay/non-transfer of shares, issue of duplicate shares, non-receipt of annual/interim accounts, and non-circulation of notice of meeting, etc. Sources said that as part of its mandate to regulate the capital markets, an order was issued to treasury manager of a listed company for insider trading under Section 15E of the 1969 Securities and Exchange Ordinance through which a penalty of Rs 200,000 was imposed and he was directed to pay Rs 832,140 to the company. In addition, a show-cause notice was also served on the employee of a brokerage house for insider trading under the same section. Moreover, orders were issued against 19 beneficial owners of the listed companies under Section 224(4) of the 1984 Companies Ordinance for late filing of returns of beneficial ownership. In addition, eight warning letters were also issued to the directors of 3 listed companies for late filing of returns.
For effective implementation of the policy earlier formulated for dealing with companies in continuous violation/non-compliance of listing regulations of the stock exchanges, amendments were approved to the listing regulations of the three stock exchanges to incorporate the said policy into the regulatory framework of the exchanges. The SECP approved two initial public offerings (IPOs) in the equity markets and one in the TFC segment. The SMD resolved eleven complaints pertaining to brokers/exchanges and five complaints pertaining to companies.
During June, the Department conveyed approval of three applications from listed companies to allow them to issue 1.335 billion ordinary shares under the provisions of Section 84 of the Companies Ordinance, 1984 and the Companies (Issue of Capital) Rules, 1996. The approval granted by the Commission resulted into fresh injection of Rs 6.354 billion into the corporate entities.
Sources said that a group of companies also applied for registration as a group company which was duly granted under Group Companies Registration Regulations, 2008. The Enforcement Department also issued a notification on June 7, 2011 in consultation with Institute of Chartered Accountant of Pakistan (ICAP) to grant exemption from IFRS-2 Share Based Payments to all such entities which are otherwise required to comply with the IFRS-2 while accounting for the "Benazir Employee Stock Option Scheme", dated August 14, 2009.
About the compliance report on enforcement actions and market development in respect of Specialised Companies Division (SCD) for June 2011, sources said Specialised Companies Division (SCD) (Enforcement Department) issued 17 letters to the various NBFCs with regard to the SCNs already issued to certain NBFCs or taking up the findings of the onsite inspection reports/offsite surveillance reports with the entities. Eleven complaints received from various quarters were forwarded to concerned NBFCs/Modarabas for resolution during June 2011. Neither any new law was promulgated nor any amendments were made in the existing laws in the Month of June 2011, sources added.