Law: Companies Ordinance, 1984

Section: 218

Companies Ordinance (XLVII of 1984)--S. 218---Failure to circulate to shareholders, abstract relating to increase in Chief Executive's remuneration---Imposition of penalty---Enforcement Department, while examining financial statements of the Company for relevant year, noticed that remuneration of Chief Executive of the Company, had been increased from Rs.4.059 million to Rs.6.330 million without intimation to shareholders as per requirements of subsections (1) & (2) of S.218 of Companies Ordinance, 1984---Representatives of company In response to show-cause notice, contended that there was no major variation in the existing terms of appointment of Chief Executive and it was a normal annual increase---More than 50% increase having been made in the remuneration of the Chief Executive, representatives were asked to provide documentary proof i.e. contract evidencing such a huge increase as annual increment, but they failed to do so and finally admitted that company had made default of provisions of S.218 of Companies Ordinance, 1984---Default was established, however, keeping in view company's past track record, lenient view was taken in the matter, instead of imposing fine of Rs.5,000 each on company and its Secretary, fine of Rs.5,000 was imposed on the Company only. ORDER ASHFAQ AHMAD KHAN, DIRECTOR ENFORCEMENT.---This order shall dispose of the proceedings initiated under section 218 of the Companies Ordinance 1984 (Hereinafter referred to as the "Ordinance") against Messrs General Tyre and Rubber Company of Pakistan Limited (the "Company") and its Secretary for failure to circulate to the shareholders, abstract relating to increase in Chief Executive's remuneration. 2. The facts leading to this case, briefly stated, are that the Enforcement Department, while examining the financial statements of the Company for the year ended June 30, 2005, noticed that the remuneration of Chief Executive of the Company have been increased from Rs.4.059 million to Rs.6.330 million without intimation to the shareholders as per the requirements of subsections (1) and (2) of section 218 of the Ordinance. 3. The provisions of subsections (1) and (2) of section 218 of the…

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