SECP steps up enforcement efforts against corporate and market fraud

The Securities and Exchange Commission of Pakistan (SECP) plans to
ramp up policing of corporate and market fraud by seeking charges
against more individuals and pursuing larger fines against companies
that commit wrongdoing.




The SECP's Enforcement Department while enforcing compliance of
corporate and allied laws continued its efforts to attain zero
tolerance for violations of shareholder rights as well as facilitation
of corporate and statutory compliance by companies.

The department initiated 56 show-cause proceedings related to various
matters, including violations of takeover laws and non-compliance with
legal requirements regarding auditors' reports, directors' powers,
holding annual general meetings, investment in associated companies,
circulation of financial statements, treatment of surplus on
revaluation of fixed assets and security deposits etc.

During the period under review, the department concluded 62
proceedings, including proceedings initiated in the last couple of
months, against chief executives, directors and auditors of companies
for aforesaid violations.

In order to facilitate further issue of capital, approval was granted
to a company to issue ordinary shares of Rs10 each to holders of Rs1
billion participation term certificates (PTCs), by way of otherwise
than right. In addition, the SECP relaxed the requirement of the 1996
Companies (Issue of Capital) Rules in two cases and granted approval
to a bank to issue right shares more than once in a year to meet
minimum capital requirements. Another company was facilitated by
allowing it extension in time for the book closure announcement of
right issue.

In addition, 65 investor complaints pertaining to non-issuance of
shares, non-verification of transfer deeds and non-payment of
dividends were resolved. Twenty-three companies were given approval to
appoint their cost auditors under the 1998 Companies (Audit of Cost
Accounts) Rules.

Six companies were granted exemption from the statutory duty of filing
consolidated financial statements while one company was allowed to
change the place of its annual general meeting (AGM). In addition, one
company was granted an extension to hold the AGM.

Keeping in view the practical difficulties faced by companies,
relaxation from the mandatory requirement of printing, computerized
national identity card (CNIC) number on the dividend warrants was
granted to 21 companies