Late filing of return: SECP issues warning to director of textile mill

The Securities and Exchange Commission of Pakistan (SECP) has issued a strict warning to a director of a textile mill for committing default of late filing of the return of beneficial ownership under Companies Ordinance 1984. According to an order issued by the Director Market Supervision and Registration Division SECP against a textile mill on Tuesday, the SECP has considered the submissions made by the respondent (director of textile mills).
The said director has admitted the default of late filing of the return of beneficial ownership with the contention that said default was not committed wilfully and knowingly. The respondent has left the board of directors of the company and requested to condone the default in question, with the plea that the same was not committed intentionally. Considering the submissions made by the respondent, the SECP intends to agree to the contention of the respondent and of the view that the late filing of the under reference return of beneficial ownership may not be wilful. Therefore, a lenient view of the matter has been taken and the director is hereby strictly warned to ensure timely compliance of section 222 of the Ordinance, in future, if any.
This order has disposed of proceedings initiated under section 224(4) of the Companies Ordinance, 1984 (Ordinance) by the Securities and Exchange Commission of Pakistan (Commission) through show cause notice issued to director of textile mill.
The facts of the matter leading up to aforesaid notice are that the issuer company is a public listed company and the respondent being its director was required to file return of beneficial ownership on Form 32, within the period stipulated under section 222 of the Ordinance. However, he failed to discharge the said obligation which attracts penal provision contained in section 224(4) of the Ordinance.
The section 222(2)(c) of the Ordinance stipulates the period within which the Form 32 to be submitted: "where there is any change in the position or interest as aforesaid including a change in the beneficial ownership of any equity, security, within fifteen days of such change."
The respondent in response to this office letter dated 08/7/2013 filed Form 32 with the Commission on 21/08/2013. The aforementioned Form 32 showed that 8,050,000 shares of the company were purchased by him on 27/02/2012. Thus, he was required to report the said change in beneficial ownership to the Commission on 13103/2012, but the same was reported on 21/08/2013, with delay of 526 days, in contravention of Section 222(2) (c) of the Ordinance. The said contraventions prima facie attract penal provision of Section 224(4) of the Ordinance, which provides as under:
"Whoever knowingly and wilfully contravenes or otherwise fails to comply with any provision of section 222, section 223 or section 224 shall be liable to a fine which may extend to thirty thousand rupees and in the case of a continuing contravention, non-compliance or default to a further fine which may extend to one thousand rupees for every day after the first during which such contravention, non-compliance or default continues."
The commission took cognisance of the aforesaid default and issued notice to the respondent under section 224(4) of the Ordinance, calling upon him to explain through written reply along with documentary evidence, if any, as to why action may not be taken against him pursuant to section 224(4) of the ordinance, for aforesaid contravention of section 222 of the ordinance. Moreover, in order to provide an opportunity of being heard in person hearing in the matter was fixed for 29/0112013 at Commission's Head Office, Islamabad. But neither the director/his authorised representative attended the said hearing, nor the respondent made request for adjournment of the said hearing. However, the respondent vide letter dated 22/01/2014 responded the matter.