Law: Companies Act, 2017

Section: 192,193,512

Listed Companies (Code of Corporate Governance) Regulations, 2019---

----Reglns. 7 & 37---Companies Act (XIX of 2017), Ss. 192, 193 & 512---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Failure of company to appoint a female director---Mandatory provisions, violation of---Securities and Exchange Commission of Pakistan (SECP) imposed a penalty of Rs.50,000/- on the company---Contention of the appellant / company was that no female was willing to work as a director in the appellant-company as the company was not operational and a winding up petition was also pending before the Court---Validity---A public listed company has higher responsibility towards its stakeholders and is obligated to act in the best financial interest of the share holders of the company to safeguard it---Law has made some provisions mandatory in nature which have to be followed---Violation of mandatory provision merely on the basis that no one is willing to join has no justification---Appellant was still an existing legal entity and it had to comply with the legal requirements---However, in present case despite concerted efforts, the appellant found itself unable to appoint a female director on its board, due to reasons that qualified female candidates were reluctant to engage with a company grappling with multifaceted challenges including the appellant's dysfunctionality, restriction of share transfers and above all, winding up petition against the appellant---Appellate Bench while considering the mitigating factors converted the penalty into warning and directs the Appellant to be careful in future---Appeal filed by the company was disposed of accordingly.

ORDER