Law: Companies Ordinance, 1984

Section: 196,208,473,476

Companies Ordinance (XLVII of 1984)--Ss. 196, 208, 473 & 476---Making investment in associated company unauthorisedly and in violation of law---Imposition of penalty---Company made contract with the associated private company---Board of Directors of the company did not pass any resolution allowing the company to enter into agreement of sale, purchase or acquiring services from said associated private company---Board of Directors of the company was bound to pass resolution in accordance with S.196 of the Companies Ordinance, 1984, while entering into agreement with said associated private company---Company transferred the machinery costing more than ten million rupees to said associated private company on one hand and on the other without any return on such investment contrary to the requirements of S.208 of the Companies Ordinance, 1984---Said associated private company through such an arrangement was benefited which got assets free of costs and free of interest and depreciation expenses---Associated private company was also getting business from the company without fear of future competition---Common Directors of the associated private company were the ultimate beneficiaries of said transaction and the shareholders of the company were on the losing side getting no return on such investment---Merely emphasizing that the company gained numerous advantages from such transfer of machinery, would not relieve' the Company to obtain the mandatory shareholder's resolution in terms of S.208 of Companies Ordinance, 1984---Provisions of Ss. 196 & 208 of Companies Ordinance, 1984, had been violated by the Directors of the company---Directors of the company having violated the mandatory provisions of law, fine of Rs.3, 200, 000 had been imposed on the Directors accordingly. ORDER TAHIR MAHMOOD, EXECUTIVE DIRECTOR (ENFORCEMENT).---This order will dispose of the proceedings pertaining to contravention of the provisions of sections 196 and 208 of the Companies Ordinance, 1984 (hereinafter referred to as "the Ordinance") which has arisen out of the show-cause notice No.EMD/233/299/2002-3984-92 dated May 15, 2008 served on all the Directors including the Chief Executive…

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