| Case ID |
0fad4d5b-2793-4e62-a279-69c0c50f5b92 |
| Body |
View case body. Login to View |
| Case Number |
EMD/CO.233/73/2002 |
| Decision Date |
Mar 03, 2006 |
| Hearing Date |
Mar 01, 2006 |
| Decision |
The Securities and Exchange Commission of Pakistan imposed fines on the Chief Executive and Directors of Hajara Textile Mills Limited for non-compliance with the Companies Ordinance, 1984. The Directors improperly converted a Rs.68.75 million loan into equity during a right issue, violating multiple sections of the ordinance and related rules. Despite acknowledging the Directors' efforts to revive the company, the Commission reprimanded them for misleading shareholders and failing to adhere to statutory requirements. A fine of Rs.20,000 was levied on each responsible party, and the Directors were mandated to submit revised financial projections and a comprehensive business plan within 60 days. Failure to comply would result in legal actions under the Land Revenue Act, 1967, including potential asset seizures. |
| Summary |
In the case EMD/CO.233/73/2002, the Securities and Exchange Commission of Pakistan scrutinized Hajara Textile Mills Limited for violations under the Companies Ordinance, 1984, during a 2005 right issue. The Directors of the company converted a Rs.68.75 million loan into equity without proper disclosure, contravening the Companies (Issue of Capital) Rules, 1996, and the Balloters, Transfer Agents and Underwriters Rules, 2001. This financial misconduct led to the dilution of ordinary shareholders' equity and raised significant corporate governance concerns. The Commission issued fines to the Chief Executive and Directors for misrepresenting the use of right issue proceeds and failing to comply with statutory obligations. Despite acknowledging the Directors' commitment to reviving the company's fortunes, the Commission emphasized the importance of transparency and regulatory compliance. The Directors were ordered to provide revised financial strategies and business plans within a specified timeframe to prevent future violations. This case underscores the critical need for adherence to corporate laws and ethical financial practices within Pakistan's corporate sector, highlighting the role of regulatory bodies in enforcing accountability and protecting shareholder interests. |
| Court |
Securities and Exchange Commission of Pakistan
|
| Entities Involved |
Securities and Exchange Commission of Pakistan,
M/s. HAJARA TEXTILE MILLS LIMITED,
Dr. Sajid Qureshi,
A. Hameed Chaudhry,
Saadat A. Chaudhry
|
| Judges |
Dr. Sajid Qureshi
|
| Lawyers |
Not available
|
| Petitioners |
Securities and Exchange Commission of Pakistan
|
| Respondents |
M/s. HAJARA TEXTILE MILLS LIMITED,
A. Hameed Chaudhry,
Saadat A. Chaudhry
|
| Citations |
2006 SLD 361,
2006 CLD 556
|
| Other Citations |
Not available
|
| Laws Involved |
Companies Ordinance, 1984,
Companies (Issue of Capital) Rules, 1996,
Balloters, Transfer Agents and Underwriters Rules, 2001
|
| Sections |
83,
476,
492,
R.5
|