Law: Companies Ordinance, 1984

Section: 196(3)(a),476

Companies Ordinance (XLVII of 1984)--Ss. 196 & 476---Sale of sizeable part of assets of the company without consent of general meeting---Imposition of penalty---Proceedings were initiated against Chief Executive and Directors' of the company for selling a sizeable part of assets of the company comprising plant and machinery/ in contravention of the provisions of S.196(3)(a) of the Companies Ordinance, 1984, whereunder Directors of the company could not sell or lease out assets of the company without consent of general meeting-Validity---Sale of machinery was never included in the agenda item in any general meeting of the company held during last seven .years---Directors' report attached to the accounts, did not show sale of said plant and machinery; as it was a sizeable part of overall undertaking of the company, its sale required consent of general meeting of the company---Stance taken by the company in response to Commission's proceedings, violated the principles of good corporate culture and depicted carelessness on the part of Directors of the company---Mandatory requirements were meant to ensure that shareholders were consulted prior to sale of the undertaking or a sizeable part thereof---Such breach could not be ignored---Default was established and directors were liable for punishment under provisions of S.196(4) of the Companies Ordinance, 1984---Considering the fact that the proceeds from the sale of assets were utilised to repay the liabilities of the company and the fact that the management was making efforts for revival of the company, instead of imposing maximum fine of Rs.100, 000 on each director, penalty of Rs.20, 000 was imposed on Chief Executive and three directors of the company---Taking lenient view, three female directors had been condoned---All Directors, however, were warned to be careful and vigilant in future and comply with the requirements of the law in letter and spirit.ORDER ALI AZEEM IKRAM, DIRECTOR (ENFORCEMENT).---This order shall dispose of the proceedings initiated against the chief executive and directors of M/s Hamid Textile Mills Limited ("the Company") for selling a sizeable part of assets of the Company…