Law: Companies Ordinance, 1984

Section: 86

Companies (Issue of Capital) Rules, 1996--Rr. 5(ii), (iii) & 11---Companies Ordinance (XLVII of 1984), Ss. 86 & 492--Increasing capital of the company by issue of further shares---Failure to provide necessary information--Imposition of penalty--While announcement made by the company for the right issue, it was observed by Enforcement Department that company had not provided to the Commission and Stock Exchange, as required under sub-rule (ii) of R.5 of Companies (Issue of Capital) Rules. 1996, the purpose of right issue, benefits to the company, use of funds and financial projections for three years---Company had also not provided financial plan and projections signed by all the Directors who were present in the meeting in which the right issue was approved---Chief Executive and Directors had violated provisions of R.5 of Companies (Issue of Capital) Rules, 1996 and S.492 of Companies Ordinance, 1984, and had not exercised due care while making announcement of issue of right shares---Full information as required under S.492 of Companies Ordinance, 1984 was not provided and crucial explanations were also not given-Company had admitted that it was a mistake and it was simply overlooked---Acquisition was of a large magnitude, to make careless mistake at that level was unbelievable and was mismanagement by Directors and the Company---Announcement of right issues made by the company, did not meet the requirement of Sub-rule (ii) of R.5 of Companies (Issue of Capital) Rules, 1996 and was made without stating the purpose of right issue, benefits to the company, use of funds and providing financial plan and projection in violation of the Rule-Information that was subsequently provided, had omitted the name of Power Plant and its capacity---Company had become liable to be imposed penalty, however, instead of imposing maximum penalty of Rs. 1,00,000 as prescribed by S.492 of Companies Ordinance, 1984 taking lenient view fine of Rs.50,000 was imposed on each Director, accordingly. ORDER DR. SAJID QURESHI, EXECUTIVE DIRECTOR (CLD).---This order will dispose of the proceedings initiated against the Chief Executive and Directors of Altern Energy Limited (the Company)…

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