Law: Companies Ordinance, 1984

Section: 82

Companies Ordinance (XLVII of 1984)--Ss. 82, 84, 86, 196, 476 & 492---Sanction of the Securities and Exchange Commission for issuance of shares at a discount---False statement---Application filed by the company seeking sanction of the Commission for issuance of shares at discount, was accorded by the Commission in terms of S.84 of Companies Ordinance, 1984, subject to compliance of the requirements of S.86 of the Ordinance---Extension in the period for issuance of shares at discount, as sought by the company, was also allowed---Directors of the company, prima facie, did not follow the prudent commercial practices---Board of Directors of the company, was legally bound to discuss the agenda of the meeting, specifically payment and arrangements with reference to underwriting commission with judiciousness, keeping in view the spirit of S.82 of the Companies Ordinance, 1984, while exercising their powers under provisions of S.196 of the Companies Ordinance, 1984--- Underwriting arrangements, could only be made in case of public subscription; and if the public would fail to subscribe, the underwriter would take up shares and get his commission according to contractual obligation---Underwriter was paid commission for the risk he was exposed to in the placing of shares before the public---In case of a private company, limited numbers of private shareholders were involved, and no justification was known and could easily be ascertainable at any time before subscription day---No risk, in circumstances, could be visualized for which underwriting arrangements were made and amount of underwriting commission was paid---Company should have disclosed such arrangements of underwriting commission---Non-disclosure and omission of said arrangements in original application made by company spoke of concealment of the fact, which attracted the provisions of S.492 of the Companies Ordinance, 1984---Whole exercise by the company, had revealed that it had omitted material fact about underwriting commission and concealed it from the regulator while obtaining approval for issuance of shares at discount; and in circumstances violated the provisions of Ss.196 & 492 of the Companies…

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