Law:

Section:

Companies Ordinance (XLVII of 1984)--- ----S. 86---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Further issue of capital to increase capital of the company---Company had passed special resolution, whereby Chief Executive Officer (CEO) was granted an option to subscribe 2.00 million ordinary shares of the company at Rs.10 each (the option)---Company, in view of said resolution, entered into a stock option agreement with the CEO, which later on was amended---Chief Executive Officer, as per agreement, had right to subscribe 2.00 million shares of the company within a period of five and half years starting after one year from the date of listing at Stock Exchange---Soon after passing the resolution, the company approached the Securities and Exchange Commission of Pakistan (the Commission), for approval of the option---Company was advised to approach the Commission at the time 'Board of Directors' of the company, would decide to issue shares to CEO---Board of Directors, in its meeting had decided to issue the option to CEO and in that regard, the company filed an application for Commission's approval under first proviso to S.86(1) of the Companies Ordinance, 1984---Said application was rejected by the Commission (Corporate Supervision Department) vide the impugned order---Resolution in question having been passed, without any defect, same could not be invalidated on the ground that it was passed by the company prior to acquiring the listing status---Corporate Supervision Department of the Commission had failed to refer any law or provision to declare the same void or defective---No reason existed to support an apprehension that the approval of the option to CEO would be detrimental to the rights of the company's shareholders---Sanctity being attached with the resolution, same was to be honoured---Conclusion drawn by the Corporate Supervision Department of the Commission in that regard was erroneous---Agreement entered by the company, was binding and for its execution, presence of all or any one of the shareholders, who consented for such agreement through a special resolution, was not required and inclusion of new shareholders having…

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