ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has ordered probe into the affairs of Pakistan Engineering Company Limited (PECO), which is dysfunctional for the last two years.
Well-informed sources told Business Recorder that PECO, which is enmeshed in issues due to a dispute between its CEO and Board of Directors, will now face the regulator for not following the rules and procedures.
In a recent development, the company submitted a notice to the Pakistan Stock Exchange (PSX) apprising it that an investigation order has been issued to the company by the SECP following an inquiry it had conducted after issuance of a show-cause notice to the company last year, under Section 257 of The Companies Act, 2017.
On March 24, 2021, the SECP took notice of the situation after having received numerous complaints from Directors & employees and observing non-compliances by the Company which included but was not limited to non-holding of Annual General Meetings (AGMs), non-filing of accounts and holding the position of Chief Executive Officer (CEO) after his removal by the Board of Directors in December, 2018 and expiry of his term in March 2019. The notice stated that PECO failed to file its quarterly and annual financial statements, has not called any Board Meeting, has not paid employees and suppliers, has failed to file tax returns, has defaulted on a loan from National Bank of Pakistan and been placed on the defaulters' counter by PSX.
On being questioned by the SECP on the disorderly way the business of PECO is being operated, an unauthorized representative of the Company gave unsubstantiated replies which did not address the SECP's concerns.
Meanwhile, the CEO is operating the company's bank accounts and has leased out the Company to a third party.
Ministry of Industries in its letter of January 29, 2021 to the CEO informed him that his entering into a Joint-Venture agreement and leasing out the company does not come within the ambit or ordinary business and is directed to immediately sever all terms as the agreement is considered void ab initio. He was also directed to submit a compliance report to this effect within three working days which after almost a month and a half is still awaited by the Ministry. The sources said, as a result of these revelations and worrying circumstances, the SECP has appointed a team of inspectors to further investigate the affairs and ascertain the factual position at PECO. The notice also stated that it shall be the duty of all those involved with the company to provide complete assistance to the inspectors nominated by the SECP, and failure to do so will make the officers, employees, and agents of the company liable to be punished.
Copyright Business Recorder, 2021