Violations of Companies Act: SECP imposes huge penalties on textile, other cos

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has imposed huge penalties on textile companies, cement manufacturers and other licensed entities for committing violations of different provisions of the Companies Act.

The SECP officials told media persons at the SECP Headquarters, on Friday that the companies have committed different violations under the companies’ law. The SECP has issued orders against these companies under the enforcement drive of the commission.

For example, Rs100,000 penalty has been imposed on Mandviwalla Mauser Plastic Industries Limited for violating sections 512(2) and 479 of the Companies Act, 2017 read with regulations 6 (1) and 27 (1)(iii) of the Listed Companies (Code of Corporate Governance) Regulations, 2019.

In the case of Flying Cement Company Limited, the SECP has also taken action against the company.

SECP imposes penalty of Rs77m on 579 listed cos, licensed entities

Through another order, Pak Datacom Limited has acknowledged the delay in deposit of contributions to the Provident Fund Account. However, the SECP has duly considered that the Company had subsequently deposited the outstanding provident fund amount and rectified the aforesaid non-compliance; coupled with binding assurance for future compliance. In view of the foregoing, the SECP has concluded proceedings by imposing a penalty of Rs10,000 on the company.

In the matter of the show-cause notice issued to the Fateh Sports Wear Limited, the requirements of Section 211 of the Companies Act are explicit requiring all cash transaction of a company with its director to be conducted through banking channels.

The Company has also acknowledged that the aforesaid transactions are conducted with directors other than banking channels and requested for the compassionate view owing to the financial crises of the company and assurance of future compliance.

Most of these payments were primarily made on behalf of the Company to utility companies on account of electricity bill, while one of the payments is made to the share registrar of the Company.

This reflects that these were bona fide payments, made on behalf of the Company, which are also not of substantial amounts. The operations of the company are closed of last few years, which resulted in financial crises for the company, and constrained directors to pay certain expenditure of the company on behalf of the Company. Therefore, warning has been issued to the company by the SECP.

The SECP has also imposed penalty of Rs40,000 on Premium Textile Mills Limited for violating provisions of section 205(1) and Section 207(1) of the Companies Act.

The SECP has also imposed penalty of Rs50,000 on Crescent Cotton Mills Limited for violating sections 176 and 183 of the Companies Act.

A penalty of Rs50,000 has been imposed on Asim Textile Mills Limited under sections 176(1), 205(1) and 207(1) of the Companies Act, 2017.

The SECP has also initiated proceedings against Directors of Pakistan PVC Limited under section 166 of the Companies Act, 2017 read with Sections 169 and 479 thereof.

A penalty of Rs50,000 has been imposed on Dadabhoy Cement Industries Limited for the violation of regulation 7 of the (Code of Corporate Governance) Regulations, 2019.

The supervision of unlisted companies is based on a risk-targeted approach where public sector companies and other companies involving direct or indirect public interest are prioritized. During the year, primary focus was on public sector companies and associates of listed companies.

The other focus area included proactive actions against companies carrying out unauthorized business and compliance with the provisions of the Companies (Maintenance and Audit of Cost Accounts) Regulations, 2020 on applicable sectors e.g. sugar, cement, cooking oil & ghee, chemical fertilizers, wheat and flour, the SECP officials added.

Copyright Business Recorder, 2023