Violation of Balloter and Transfer rules: SECP shows mercy, imposes nominal penalty on agent

Keeping in view family tragedy with the CEO and directors of a company, the Securities and Exchange Commission of Pakistan (SECP) has taken a lenient view and imposed a nominal penalty of Rs 25,000 on the Balloter and Transfer agent for violating Balloters and Transfer Agents Rules, 2015.

In this regard, the Securities Market Division (Adjudication Department) has issued an order here on Friday.

According to the response of the Balloter and Transfer agent to the SECP, "Unfortunately, due to uncertain circumstances and tragedies with the Board, it was just overlooked. Almost all documents were completed under the new regulations except the paid-up capital.

The Adjudication Department noticed for the Board Meeting as well but CEO got foot fractured and had 8 weeks plaster and she remained mostly at home due to problems in her mobility. This problem was going on and family faced another tragedy, the death of dear family member, elder beloved brother of two directors and uncle of one director.

He remained almost 6 weeks in CMH and on ventilator so during all this hard time we were mentally disturbed and due to this abnormal and painful situation, this very important matter ignored. He was one of the sponsors/founders of the company and an associated consultant after his resignation from the Board. It was a big loss for the family and Company," the company added.

Brief facts of the case are that the Respondent was registered as Balloter and Transfer agent under the Balloters and Transfer Agents Rules, 2015 ("Rules") (now repealed). Share Registrar & Balloters, Regulations, 2017 (the "Regulations") were promulgated on January II, 2017. Regulation.

3 of the Regulations requires that a person registered as share registrar & balloters agent (the "SRB") under the Rules, prior to coming into force of the Regulations shall be deemed to be licensed as SRB under the Securities Act, 2015 ("Act") and the Regulations till the time its existing certificate of registration remains valid.

The existing certificate of registration of Respondent expired on November 26, 2018. However, no application for grant of license was received until July 5, 20 J9. The Respondent, prima facie, performed the functions of SRB after expiry of its license in contravention of section 64 of the Act and regulation 3 of the Regulations attracting provisions of section 159 of the Act.

Further, the Respondent was required to enhance its paid up capital to three million rupees by June 30, 2018 as per the requirement or regulation 4 of the Regulations. However, the Respondent completed the requisite formalities for increasing the paid up capital by June 30, 2019, thereby, failed to comply with regulation 4 of the Regulations by June 30, 2018 attracting provisions of section 150 of the Act.

The Respondent, prima facie, acted in contravention of the Act and Regulations. Accordingly, the Commission took cognizance of the aforementioned facts and served the SCN requiring the Respondent to explain its stance in person on September 20, 2019, the SECP added.