Law: Companies Ordinance, 1984

Section: 208,476

Companies Ordinance (XLVII of 1984)--Ss. 208 & 476---Making investments in associated companies and ' undertakings in excess of its entitlement---Imposition of penalty---Company was authorized by the shareholders to make a total equity investment up to Rs.88.67 million while it had invested in an associate undertaking---Company, however, in addition to that, had given guarantee to a commercial Bank on behalf of said associate company amounting to Rs.138.00 million during the year 2006 without taking approval from the shareholders---Company, prima facie, had contravened the provisions of S.208 of the Companies Ordinance, 1984---Representatives of the company, while admitting the default, had - prayed that a lenient view be taken and proceedings could be withdrawn and assured that the company would ensure strict compliance of the statutory provisions in future---Under 5.208 of the Companies Ordinance, 1984 it was mandatory that a `special resolution' be passed for making investment in associated undertakings, but the company had not complied with the requirement of said mandatory provisions of law---For said violation of S. 208 of the Companies Ordinance, 1984 Directors of the Company were liable for penalties as defined in subsection (3) of S.208---Keeping in view the track record of the company, lenient view was taken of the matter and instead of imposing a maximum penalty of one million rupees on each Director, a token fine aggregating to Rs.4,50,000 was imposed which would be paid by six Directors accordingly---Directors of the company were directed to deposit said fine in the designated bank account in the name of Commission within specified period. ORDER TAHIR MAHMOOD, EXECUTIVE DIRECTOR (ENFORCEMENT).---This order will dispose of the proceedings initiated through show-cause notice bearing No.EMD/233/ 36/02 dated October 10, 2007 against all the directors. including the Chief Executive of Faran Sugar Mills Limited ("the Company") under the provisions of section 208 read with section 476 of the Companies Ordinance, 1984 ("the Ordinance"). 2. The Company was incorporated in Pakistan as a public Limited Company on November 3 1981 under the Ordinance and…

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