SECP starts 73 show-cause proceedings against CEOs, directors and auditors

ISLAMABAD, September 17: As part of its mandate to safeguard the investors’ interest in both listed and unlisted corporate sector, the Enforcement Department  of the SECP in July and August initiated 73 show-cause proceedings against chief executives, directors and auditors in view of the breaches of statutory requirements related to takeover regulations, issuance of auditors’ reports, powers of directors, holding and proceedings of annual general meeting, direction to hold over-due annual general meetings, investment in associated companies and undertakings, reporting of facts, employees’ provident funds, circulation of financial statements, disclosure of directors’ interests, treatment of surplus on revaluation of fixed assets, and security deposits.

The department concluded 66 proceedings against chief executives, directors and auditors of companies either by penalizing them or by issuance of warning to the identified defaulters, depending on the nature and impact of default. In addition, the department also initiated inspection into the affairs of two companies.

Addressing the grievances of investors, the department resolved 29 complaints pertaining to non-issuance of shares, non-verification of transfer deeds, and non-payment of dividends. In addition, the SECP during the months granted exemption to five companies from the requirements of filing of consolidated financial statements, as available under the law. A listed company was allowed to change its financial year to coincide with the year-end of its financial statements with that of its parent company. An application for registration as a group was also approved.

In order to promote a good corporate culture in the country, six companies were facilitated by relaxing the mandatory requirement of printing computerized national identity card (CNIC) number on dividend warrants, as provided under the law.  In addition, 21 companies approached for approval to appoint their cost auditors under the 1998 Companies (Audit of Cost Accounts) Rules.

With regard to raising capital, relaxation was granted to a company from the requirement of Rule 8 of the 1996 Capital Issue Rule for issuance of shares for consideration other than in cash.