ISLAMABAD (August 07 2003) : For the first time, the Securities and Exchange Commission of Pakistan (SECP) has decided to take action against listed companies which have failed to hold elections of its directors every three years.
Commission sources said that a total of 32 listed companies, including several leading companies, are likely to face action, which did not hold election of its directors for several years and thus contravened the provisions of Section 186 of the Companies Ordinance.
Under the law, the elections of directors should be held every three years.
It is proposed that the directors of the defaulting companies may be debarred from continuing to hold the office or being elected director up to a period of three years.
The Commission has decided to initiate action against 32 companies, which have not held elections of the directors for a long time.
Under the Companies Ordinance 1984, the companies are required to hold election of their directors every three years.
It is the responsibility of the retiring directors to take immediate steps to hold elections of directors and, in case of any impediment, report to the Commission.
The defaulting directors are liable to a fine and may also be debarred from becoming or continuing as director for a period up to three years.
Commission sources said that the directors of following companies are likely to face action under the law:
Alif Textile Industries; Apex Fabrics Ltd; Azmat Textile Mills Ltd; Bahawalpur Textile Mills Ltd; Haji Dossa Ltd; Johnson and Phillips Ltd; Kaiser Arts and Crafts Ltd; Kareem Silk Mills Ltd; Myfip Video Industries Ltd; Norrie Textile Mills Ltd; Orient Straw Board and Papers Mills Ltd; Pakistan Northern Insurance Company Ltd; Quality Steel Works; Schon Textile Ltd; Standard Insurance Ltd; Tawakkal Garments Ltd; Tawakkal Ltd; Valika Woolen Mills Ltd; Amazai Textile Mills Ltd; Bela Automobile Ltd; Taxila Engineering Ltd; Quice Food Industries Ltd; Tawakkal Polyester Ltd; Saif Nadeem Kawasaki Ltd; Adil Polypropylene Products Ltd; Awan Textile Mills Ltd; Mubarak Dairies Ltd; Pakistan Dairies Ltd; Regal Ceramics Ltd; Sterling Insurance Co Ltd; Suraj Ghee Industries Ltd; and Zahur Textile Mills Ltd.
It may be recalled that in recent years the Commission has taken serious note of several flaws in the working of the listed companies, like not holding AGM or not making public their accounts for which several companies were penalised.
The companies are now responding well to holding their annual general meetings and sending the accounts to the shareholders.
The latest move to initiate action against the companies for not holding election of directors on three-year basis will also protect the interests of the shareholders who may be encouraged to elect their representatives as directors of the companies.