Law: Companies Ordinance, 1984

Section: 177

Companies Ordinance (XLVII of 1984)---Ss. 177, 186 & 476---Non-holding of election of Directors of the company---Imposition of penalty---Last election of Directors of the company was held on March 26, 2002 to elect Directors for a period of 3 years which expired on March. 26, 2005---Directors of the company were required to hold fresh election of Directors on or before March 26, 2005, but continuing Directors, not only failed to hold election on or before said prescribed period but also failed to report the impediments to the Registrar of Companies within fifteen days as required under S.177 of Companies Ordinance, 1984--Show-cause notice was served upon the Directors of the company, but they failed to respond to said show-cause notice despite they were duly served and no one appeared on date of hearing despite being adjourned date of hearing--Counsel for Directors admitted the fact that election of Directors were not held within the prescribed time and also that Directors jailed to report to the Registrar of the Companies in that regard---Counsel. however averred that election of Directors could not be held due to circumstances which were beyond the control of the company and submitted that the company had finalized its annual audit accounts for the last three years and had planned to hold its overdue annual general meeting in January, 2007---Default of company to hold election of Directors thus was established and admitted---Directors were supposed to take immediate steps to hold election of Directors, of the company and in case of impediments they should have reported the circumstances to the Registrar of the Companies, but they failed to do so---Considering the fact that Directors had now held elections in Annual General Meeting, taking lenient view of the default, instead of imposing maximum penalty of Rs.10,000 on each Director and debarring them from continuing or becoming the Director of. the company for a period of 3 years. a token penalty of Rs.10, 000 only was imposed on Director, who was also Company Secretary of the company---All other Directors were advised to remain careful in future in ensuring compliance with mandatory requirements of the…

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