The Appellant Bench of the Securities and Exchange Commission of Pakistan (SECP) Thursday observed that any company's argument that its chief executive office (CEO) is out of the country and is facing serious family issues has no basis in the law, as it is not a valid reason to delay renewal of licence.
A two-member SECP Appellant Bench has dismissed the appeal of the company and the impugned order of the Commission has been upheld. The brief facts of the case are that by virtue of the Securities Brokers (Licensing and Operations) Regulations, 2016 (Regulations), new regulatory regime was introduced w.e.f, 30/06/16 and in terms of proviso of regulation 3 of the Regulations, the Appellant was deemed licensed under section 177(3) and 178(2) of the Securities Act, 2015 (Securities Act). The Appellant was required to submit its application for renewal of licence as securities broker under the Regulations on or before 21/03/17. The Appellant, however, failed to submit its application for renewal of licence as securities broker within its stipulated period. Therefore, the licence of the Appellant as a securities broker stood expired with effect from 22/03/17.
Furthermore, the Pakistan Stock Exchange Limited (PSX) had already suspended the trading terminals of the Appellant with effect from 10/10/16 on account of not maintaining the required net capital balance. In view of the above facts, the Appellant, prima facie, was found not compliant with the provisions of Regulation 9(1) of the Regulations.
According to the SECP Appellant Bench observations, the bench has heard the parties, i.e, the Appellant (company) and the Respondent (Commissioner Securities Market Division SECP). The company has argued that the reason application for renewal of licence was not submitted within time was because the CEO was out of the country and was facing serious family issues. Secondly, the Appellant has argued that the impugned order should be remanded to the Commissioner Securities Market Division for fresh proceedings on the grounds that the show cause notice (SCN) was not issued correctly by the competent authority. The Commissioner Securities Market Division has argued that the application for renewal of licence had to be submitted through PSX in terms of Regulation 5(3) of the Regulations which was not so in the instant case. Furthermore, the Commissioner Securities Market Division argued that the SCN was issued correctly as the powers to issue show cause notice were delegated by the Commission pursuant to SRO 123(1)/2017, dated 27/02/17.
The Bench is of the view that the company has not given satisfactory reasons for non-compliance with the provisions of Regulation 9(1) of the Regulations. The Appellant's argument that the CEO was out of the country and was facing serious family issues has no basis in the law as it is not a valid reason in terms of the Regulations. The SCN was also issued correctly by the Respondent who had the relevant powers to issue such notice under the powers delegated by the Commission pursuant to SRO 123(1)/2017, dated 27/02/17. Furthermore, a hearing was held on 28/09/17 pursuant to the SCN wherein the Appellant's arguments were fully heard and the impugned order was subsequently passed.
"In view of the above, we see no reason to interfere with the Impugned Order. The Appeal is, therefore, dismissed and the Impugned Order is upheld with no order as to costs," said the order.