Law:

Section:

(a) Companies (Issue of Capital) Rules, 1996------- --------Rr. 6 & 11-------Issuance of bonus shares in violation of Rules-------Company communicated to the Commission, the decision of its Directors to issue 25 per cent bonus shares, but intimation letter was not accompanied by Auditors' certificate as required by R.6(i)(iii) of Companies (Issue of Capital) Rules, 1996-------Under provisions of R.6 of said Rules, the communication of the decision of the Board of Directors of the company, should have been sent to the Commission along with the certificate of free reserves from the Auditors on the day on which such decision was taken by the Board-------Company, in circumstances, had contravened the provisions of R.6(i)(iii) of the Companies (Issue of Capital) Rules, 1996, for which the Commission could take action as provided under R.11 of said Rules, 1996-------Default of R.6 of Companies (Issue of Capital) Rules, 1996, punishable under R.11 of said Rules, had been established-------Commission, instead of imposing the penalty on the company, took lenient view, and condoned the company and its Directors, issuing stern warning to Directors, Chief Executive and Secretary that in case of similar non-compliance in future a stronger action would be taken against them. (b) Companies Ordinance (XLVII of 1984)------- --------Ss. 194 & 196-------Duties of Directors-------Directors, in addition to the day-to-day running of the company, and the management of its business, also had some 'fiduciary' duties i.e., duties held in trust; and some wider duties imposed by statute and breach of those statutory duties, would usually be a criminal offence, punishable by fine or imprisonment-------Directors were gauged against a higher standard of accountability which required them to be vigilant and perform their duties with due care. THIS ORDER PASSED BY: TARIQ HUSSAIN, DIRECTOR (INSURANCE):------------ (Under Rule 6 read with Rule 11 of the Companies (Issue of Capital) Rules, 1996) This Order shall dispose of the proceedings initiated against the Directors (including the Chief Executive) and the Company Secretary of M/s The Pakistan General Insurance Company Limited ("the…

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