Law:

Section:

Companies Ordinance (XLVII of 1984)------S.196(4) & 208(3)--Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.34---Shares of associated company sold by directors of company (appellants) to another associated company at a lower price than market price without any special resolution of Board of Directors-Such transaction unscrambled by Board of Directors in its subsequent meeting---Imposition of penalty on appellants for their such illegal act---Validity---Appellants through such act had pocketed huge amount as profit at the cost of shareholders of company-Subsequent "unscrambling" of illegality already committed could not rectify earlier violation of law nor such rectification was recognized by provisions of Companies Ordinance, 1984---Appellants had wilfully and knowingly committed such act, for which maximum penalty as provided in S.208(3) of Companies Ordinance, 1984 had not been imposed upon them High Court dismissed appeal in limine. ORDER NASIR SAEED SHEIKH, J.---The appellants Nos. 1 to 5 are respectively the Chairman and Directors of General Tyre and Rubber Company of Pakistan Limited. They have preferred this Commercial Appeal under section 34 of the Securities and Exchange Commission of Pakistan Act, 1997 against the order dated 30-10-2009, passed by the Appellate Bench No. 2, Securities and Exchange Commission of Pakistan, Islamabad, whereby the Appeals Nos.10, 11, 12, 13 and 14 of 2008, preferred by the appellants before the said Appellate Bench of the Commission, were dismissed. 2. The -brief facts necessary for the instant Commercial Appeal are that the appellants subscribed in 302,100 right of shares of an associated company namely Ghandhara Company Limited and paid Rs.3.021 million as consideration of those shares on 13-7-2006 out of the funds of the company of which the appellants were respectively the Chairman and Directors. This huge investment was drawn by the appellants from the company funds without any resolution passed by the Board of Directors of the Company as was required in section 208 of the Companies Ordinance, 1984. After subscribing the rights of the shares of GIL, the appellants company disposed of the…

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