Law: Companies Ordinance, 1984

Section: 208

ompanies Ordinance (XLVII of 1984)--S.208---Investments in associated companies and undertakings without complying with mandatory provisions of law---Imposition of penalty---Company concerned, in addition to approval of loans/advances to be given to its subsidiary, also sought approval and ratification from share-holders in respect of loans/advances already given to subsidiary---Provisions of S.208(1) of Companies Ordinance, 1984, required passing a special resolution before making arty investment by a company in its associated companies or undertakings and did not envisage subsequent ratification of such investment---Explanation provided by company was not found convincing and it was observed that company had not complied with mandatory provisions of S.208 of Companies Ordinance, 1984 while providing advances to the subsidiary---Provisions of S.208 of Companies Ordinance, 1984 having been violated, Directors of the company were liable for penalties as provided under S.208(3) of Companies Ordinance, 1984---Giving benefit of fact that company had recovered major amount taking lenient view, instead of imposing maximum penalty of Rs. 10,00,000 on each Director, fine of Rs. 1,00,000 was imposed only on Chief Executive of the company---Other Directors were reprimanded to be careful in future and ensure compliance with requirements of law in letter and spirit. Gharibwall Cement's case 2003 CLD 131 ref. ORDER ALI AZEEM IKRAM, DIRECTOR (ENFORCEMENT).---This order shall dispose of the proceedings initiated through Show-Cause Notice No.EMD/233/368/2002-2989-95 dated November 3, 2006 against 13estway Cement Limited (BCL) under the provisions of section 208 of the Companies Ordinance, 1984 (Ordinance). Background Facts 2. Brief facts of the case are that examination of the notice' of the Annual General Meeting of BCL fur the year ended June 30, 2006(AGM) revealed that in addition to approval of loans/advances to be given to its subsidiary Mustehkum Cement Limited (MCL) in future, BCL was also seeking approval and ratification from the shareholders in respect of loans/ advances already given to MCL. Following agenda was placed before the members of BCL for their…

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