Law: Companies Ordinance, 1984

Section: 177,180,186,476

Companies Ordinance (XLVII of 1984)--- ----Ss. 177, 180, 186 & 476---Retirement of Directors of the company---Failure to hold fresh election for Directors within prescribed period---Last election of the Directors of the appellant company was held on 30-10-2009 for period of 3 years---Retiring Directors were required to hold fresh election, on or before 30-10-2012, but they not only failed to hold election as per prescribed period, but also failed to report the impediments, if any, to the Registrar of the Companies within fifteen days as required under S.177 of the Companies Ordinance, 1984---Commission being dissatisfied with the response of authorized representative of the appellant company to the show-cause notice, imposed a penalty of Rs.10,000 (Ten thousand) on the appellant company, with further direction to hold the election of the Directors within forty five days of the impugned order---Appellant pleaded that major shareholders had reached the settlement to divide the business into two segments---Validity---Plea of the appellant lacked valid and cogent reasoning; as per explicit provisions of law---Major shareholders of the company, could not avoid process of law by their mutual agreement by reaching to the settlement, not to hold the election of Directors---Operation of express provisions of Companies Ordinance, 1984 could not be stopped, except as provided therein---Appellant, could not escape the liability of violations committed in terms of Ss.177 & 180 of the Companies Ordinance, 1984---Default of the appellant company to hold election of Directors had been established and admitted by the appellant, it could safely be concluded that Commission had rightly imposed the penalty on the appellant. Central Cotton Mills Ltd. v. Naveed Textile Mills Ltd. 1996 MLD 1943 ref. THIS ORDER PASSED BY: ZAFAR ABDULLAH, COMMISSIONER (SCD) 1. This order shall dispose of the Appeal No. 44 of 2013 filed under section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 against the order dated 05.06.13 (the Impugned Order) passed by the Respondent against Mr. Zahid Mazhar (the Appellant), Chief Executive of Nadeem Textile Mills Limited (the Company)…

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