Law: Companies Ordinance, 1984

Section: 227

Companies Ordinance (XLVII of 1984)---Ss. 227, 229 & 476---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Constitution of trust for managing the provident fund---Obligation laid on company---Failure to comply with the provisions of Companies Ordinance, 1984---Annual audited accounts of the company for the relevant year, had revealed that amount of Rs.17.5 million was disclosed as payable to Provident Fund Trust by the company with mark up---Company in response to the query, submitted a loan agreement with the Trust---Company did not adhere to the loan agreement as it had not repaid the loan along with mark-up---Director (Enforcement) of the Commission vide impugned order taking a lenient view imposed penalty on the Chief Executive Officer---Where a Trust was constituted for managing the provident fund, the obligation laid on the company under S.227(2) of the Companies Ordinance, 1984, would devolve on the TRUSTEES and would be discharged by them instead of the company---Onus for managing the affairs of the Trust completely devolved on the trustees, who were bound to deal with the funds in accordance with the requirements of S.227(2) of the Companies Ordinance, 1984---Trustees, in the, present case, entered into an agreement with the company and advanced amount in contravention of the requirements of S.227(2) of the Companies Ordinance, 1984, which mandated them to use the funds only in the manner prescribed therein---Cognizance for the fault of the trustees should have been taken into account by the Commission---Trustees were reprimanded for having failed to comply with the provisions of Companies Ordinance, 1984; and were called upon to strictly comply with the requirements of S.227(2) of the Companies Ordinance, 1984. ORDER This order shall dispose of Appeal No.36 of 2008 filed under section 33 of the Securities and Exchange Commission of Pakistan (the "Commission") Act, 1997 against the order dated 15-9-2008 (the "Impugned Order") passed by the Respondent. 2. The brief facts of the case are that the annual audited accounts (the "accounts") of the Gharibwal Cement Limited (the "Company") for the year ended 30-6-2007 revealed in…

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