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SECP takes action against companies & their auditors

KARACHI: The Enforcement Department of the Securities and Exchange Commission of Pakistan (SECP) identified 25 cases of violation of legal requirements during June 2005 and took action against the companies and their auditors.

According to a press statement here on Friday, out of the twenty-five cases, penalties were imposed in nine cases, while show cause proceedings were initiated in the rest.

Seven companies, namely, Zahur Textile Mills, Service Fabrics, Dewan Cement, Dewan Hattar Cement, Telecard, Pakistan PVC and Wali Oil Mills were penalised for late or non-holding of annual general meetings and non-circulation of quarterly accounts.

A fine was imposed on Haseeb Waqas Sugar Mills for payment of dividend out of capital of the company, in violation of legal provisions. The company was also directed to make good the loss of the capital amounting to Rs5.284 million by recovering the same from its directors as the loss occurred due to their imprudent decision.

In another case, penalty was imposed on a partner of a firm of auditors for giving inaccurate and misleading audit report for the year ended September 30, 2004 in the case of Al-Jadeed Textile Mills.

Another company intended to pass a resolution in the extra-ordinary general meeting for making investment in a company through its associated company, without disclosing necessary information in the notice of meeting. The company was advised to disclose the information, as required under section 208 of the Companies Ordinance, 1984, to shareholders by way of addendum to the notice of meeting to enable shareholders to take an informed decision.

In addition, the SECP initiated show cause proceedings against two audit firms for non-compliance with provisions of Section 255 of the Companies Ordinance. The audit firms failed to discharge their duties and responsibilities laid down in the statute.

Show cause proceedings have also been initiated against fourteen companies for making unauthorized advance/loan to associated company, non-transfer of provident fund contribution as per the requirements of law, non-circulation of quarterly accounts, non-appointment of whole time company secretary and non-submission of explanation on cost auditor’s reservations made in the cost audit report within the prescribed period.

During the month, the Enforcement Department resolved 57 out of 215 investor complaints received by it.

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