Law: Securities and Exchange Ordinance, 1969

Section: 22

Securities and Exchange Ordinance (XVII of 1969)--S. 22(1)(b)---Balloters, Transfer Agents and Underwriters Rules, 2001, R.(3)---Companies Ordinance (XVVII of 1984), Ss. 86(3), 231(1), 472 & 492---Refusal or failure to comply with any order or direction of Central Government---Imposition of penalty for false statement---During examination of annual accounts of the company for relevant year, it was observed that capital of company was increased considerably---On inquiry it was discovered that share-holding of five Directors who were joint underwriters to the issue, had increased, which, however resulted in dilution of share-holding of minority share-holders---Later on, from perusal of detailed financial projections it transpired that project implementation was not completely in accordance with financial projections---Company had also failed to materialize anticipated benefits and lacked appropriately structured management set-up proficient with business planning and decision making process---In view of such state of affairs of the company show-cause notice was issued to Chief Executive and Directors of the Company asking them to explain violation of Balloters, Transfer Agents and Underwriters Rules, 2001---Management, in order to conduct the business of the company in a prudent manner, should have complete knowledge of the business environment and factors which could affect it in any manner whatsoever---Code of Corporate governance aimed at promoting such a management attitude and management while making statement of company with Code's requirements was expected to be fully cognizant of that---Management of listed-company should also be conscious of the fact that investment decisions of ordinary investors were effected by the information disseminated by them in the statutory document' circulated to share-holders---Management was responsible to ensure that undertakings were implemented in letter and spirit within the timeframe specified therein---In case of deviation of any sort, management was duty bound to disclose same to share-holders along with the effects thereof and measures taken to minimize the adverse effects---Deviation of the financial position of…

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