The Securities and Exchange Commission of Pakistan (SECP) has directed corporate sector that all the companies must meticulously follow the legal requirement for preparing and circulation of interim accounts, as this provision was introduced so that shareholders could have timely access to information about the affairs of companies.
According to the order issued by the SECP here on Monday in the matter of Karim Cotton Mills Limited, a listed company is required to file its quarterly accounts within the stipulated time, which is one month from the dose of first and third quarters and two months from the close of second quarter. The requirement to circulate interim accounts was introduced so that the shareholders could have timely access to information about the affairs of companies.
Keeping in view the fact that timing of interim financial statements is of essence the disclosure and audit requirements of these accounts have been kept to a bare minimum. Interim financial statements prepared properly and in a timely manner not only provide to its users a reliable source of information regarding a company's financial position and performance but these also show the results of management's stewardship of resources entrusted to it. In order to ensure transparency, all the companies must meticulously follow the legal requirement for preparing and circulation of interim accounts.
It is directors' responsibility to oversee the functioning of the company, to keep it appropriately staffed and organised to ensure due compliance of law, SECP added. The brief facts of the case are that as per record, the Company did not file the interim financial statements (Quarterly Accounts) for the specified periods with the Commission, in a timely manner as per requirements of section 245of the Ordinance. The respondents in the case were directors and chief executive of the company.
It is clear from the record that the Company filed the aforesaid Quarterly Accounts with the Commission with considerable delays. Therefore, provisions of the Ordinance have been contravened and the respondents are liable for penalties prescribed by sub-section (3) of section 245. However, the SECP has taken into account the submissions made by the respondents and the fact that albeit with delays, the Company has ultimately filed the Quarterly Accounts with the Commission.
Therefore, instead of imposing maximum prescribed fines on all the respondents, the SECP hereby take a lenient view and impose an aggregate fine of Rs 40,000- ie Rs 10,000 for delay in filing of Quarterly Accounts for each quarter, only on the chief executive, SECP order added.