Law:

Section:

Securities and Exchange Ordinance (XVII of 1969)--- ----S. 22---Securities and Exchange Rules, 1971, R.2(d) & Third Sched:---.---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33--- Net Capital Balance (NCB)---Calculation and determination of---Inspection Team on inspection of books and record of appellant/Trading Entitlement Certificate Holder (TECH), observed that NCB of the company was Rs.4,208,081---Company had stated that its Chief Executive Officer (CEO) had provided loan amounting to Rs.2.5 million to the company in shape of cash and gold---Inspection Team had observed that company did not provide copy of written agreement executed between CEO and company on stamp paper for said loan; that NCB, prima facie, was overstated by Rs.4,280,931 which was violation of R.2(d) of the Securities and Exchange Rules, 1971---Audited accounts of the company had shown that on 30-6-2015 cash in hand was Rs.4,280,931 out of which Rs.25,00,000 had been provided by CEO as a loan to the company and remaining amount of Rs.1,780,931 was the opening balance of cash in hand, brought forward from the previous year accounts---Appellate Bench of the Securities and Exchange Commission had no doubt to believe that Rs.4,280,931 did exist as cash in hand on 30-6-2015---Executive Director (SMD) had primarily one objection that the possession and title of cash and gold, being not transferred in the name of company, could not be used in calculation of the NCB---Appellate Bench was of the view that the agreement and the resolution were sufficient to prove that company had undisputed legal title of cash and gold---Cash and gold were in possession of CEO during inspection and proceedings before the Executive Director of the Commission---For all practical purposes, CEO was the most relevant person to hold the property and assets of a company in his possession as a trust for safe custody---Board of the company had authorized the CEO to hold the cash and gold---No anomaly was found in that regard---Appellate Bench was of the view that company had calculated the NCB in accordance with Third Schedule of the Securities and Exchange Rules, 1971 and Guidelines issued by…

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