Law:

Section:

(a) Companies Ordinance (XLVII of 1984)--- ----Ss. 208, 476 & 492---Securities and Exchange Commission of Pakistan (Appellate Bench Procedure) Rules, 2003, R. 17(5)---Investments by Company in an associated companies and undertakings, without the authority of a special resolution---Appellant/company had sold generator having market value of Rs.15 million for Rs.13 million to its associated company---Company provided benefit to associated company by selling generator on credit basis without the authority of a special resolution; which prima facie, contravened the provisions of S.208 of the Companies Ordinance, 1984---Show-cause notice was issued to Directors of the appellant company under Ss.208 & 476 of the Companies Ordinance, 1984---Board of Directors of the company, approved sale of assets on the basis of old quotations which was contrary to the information provided to Executive Director, wherein it was submitted that the assets would be disposed of through tender offers in newspapers---Approval of assets of sale by Board of Directors, on the basis of old quotation, was prima facie, a misstatement---Executive Director of the Commission being dissatisfied with response of Directors, found that violation had been committed by Directors of the company under Ss.208 & 492 of the Companies Ordinance, 1984---Penalty of Rs.25,000 was imposed on Directors of the company individually---Executive Director of the Commission had taken a lenient view while adjudicating the issue and imposed fine under S.492 of the Companies Ordinance, 1984, whereas warning was issued for the violation of S.208 of the Ordinance, 1984, though the violation of S.208 of the Ordinance, was also established---Directors of the company had breached the fiduciary duty by not complying with the requirements of relevant law---Executive Director of the Commission was required to penalize appellants for violation of S.208 of the Ordinance ---.--- APPELLANTS had intentionally avoided compliance of the Companies Ordinance 1984---Legal duty or liability, was always needed to be discharged by a person required by law and if not complied, the presumption would be that he had done so…

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