Companies Act requires firms to appoint legal adviser on retainership: SECP

The Companies (Appointment of Legal Advisers) Act requires every company to appoint at least one legal adviser on retainership to advise such company in performance of its functions and discharge of its duties in accordance with law. This has been specified in the SECP order which has disposed of proceedings initiated against a travel company and its chief executive for default made in compliance with the requirements of sub-section (1) of section 3 of Companies (Appointment of Legal Advisers) Act, 1974 (Act).
According to an order issued by the SECP here Saturday, the brief facts leading to the show cause notice are that the company was required in terms of sub-section (1) of section 3 of the Act to appoint at least one legal adviser on retainership to advise such company in the performance of its functions and discharge of its duties in accordance with law. The sub-rule (1) of rule 4 of the Companies (Appointment of Legal Advisers) Rules, 1975 (Rules) provides that every company shall within 15 days of the appointment of a legal adviser by it furnish in duplicate to the registrar of the region in which its registered office is situated, the name, names of the partners in case of a firm, address and remuneration of the legal adviser. However, from the perusal of record, it has been observed that the company has failed to do so for which a show cause notice dated July 27, 2017 (SCN) was issued calling upon the company and its chief executive to explain in writing and to appear in person or through authorized representative for hearing on August 22, 2017 to clarify the position.
In response to the above SCN, the company has informed that it has already appointed its legal advisor. Subsequently, the record has been perused and observed that the company has appointed its legal advisor on October 26, 2017 and relevant Form 29 notifying the appointment of its legal advisor has been duly filed with the registrar concerned on October 26, 2017, respectively.
The SECP has gone through the relevant provisions of the Act, and other record of the company and observed that sub-section (1) of section 3 of the Act requires the company to appoint at least one legal adviser on retainership to advise such company in the performance of its functions and the discharge of its duties in accordance with law. Further, sub-rule (I) of rule 4 of the Rules requires that every company shall, within 15 days of the appointment of a legal adviser by it, furnish in duplicate to the registrar of the region in which its registered office is situated the name (names of the partners in case of a firm), address and remuneration of the legal adviser.
The company has appointed legal advisor and this information has been submitted to the registrar. The SECP, therefore, takes a lenient view, and does not impose any fine on the company and its chief executive. The company and its chief executive are however, advised to be careful in timely compliance with the mandatory provisions of all applicable laws in future, the SECP added.