Law: Companies Ordinance, 1984

Section: 208

(a) Companies Ordinance (XLVII of 1984)--S. 208---Unauthorised investments by the Company in its associated undertakings---Imposition of penalty---Proceedings were initiated against the Chairman, Chief Executive Officer and Directors of the Company for making unauthorized investments in its associated undertakings in violation of provisions of S.208 of Companies Ordinance, 1984---Show-cause notice was issued to the company and in reply, company took plea that investments had been made on basis of advice from it's counsel as to the applicability of S.208 of Companies Ordinance, 1984---Representatives of the company on query as to whether advice of the counsel was obtained prior to making of investments, had admitted that such advice was obtained after making investments in question---Representatives, however claimed that said investments had not caused any revenue loss to the company---Plea that investments had not caused any revenue loss, was not a valid reason for violating the mandatory provisions of law by making unauthorized investments in associated undertakings---Act of making unauthorized investments having been done prior to obtaining of legal opinion, was construed as wilful-Chairman, the Chief Executive and Directors of the Company, in circumstances, had violated provisions of S.208 of Companies Ordinance, 1984 and had not exercised due care while malting investments in the associated concerns---Default had been established, however as no financial loss seemed to have been caused, instead. of imposing maximum penalty of Rs.1,000,000 as prescribed by subsection (3) of S.208 of Companies Ordinance, 1984, taking a lenient view, fine of Rs.100, 000, was imposed on each of the Directors, accordingly. (b) Words and phrases-------"Undertaking"---Connotation---Term "undertaking" had been interpreted as any business work or project, which one engaged in or attempted as an enterprise analogous to business or trade. AIR 1968 SC 554 ref.ORDER ASHFAQ AHMED KHAN, DRIECTOR ENFORCEMENT.---This order shall dispose of the proceedings initiated against the Chairman, Chief Executive Officer and Directors of Honda Atlas Cars (Pakistan) Limited (the…