Daily Times

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has taken action against companies on defaulter counter of Pakistan Stock Exchange (PSX) to provide relief to their minority shareholders.

Failure on part of the managements and directors of these listed companies to comply with the listing regulations would result in suspension in share trading of the companies that have been a cause of serious concern for the SECP.

The SECP issued these directions under Section 100 of the Securities Act, 2015, to 77 companies on defaulter segments of the erstwhile Karachi, Lahore and Islamabad stock exchanges, to take immediate steps to undo the default of aforesaid listing regulations. Thereafter, in case of non-compliance with directions and unsatisfactory responses from defaulter companies, 49 show cause proceedings were initiated against the managements and directors of these companies requiring them to explain their failure to comply with the directions.

As a result of aforesaid, eight companies complied with the directions, and have rectified their defaults and therefore, have been restored on the normal counter of PSX. The restoration of trading of shares of companies on the securities market would give investors an opportunity to buy or sell their investments. Moreover, the company’s induction on the normal counter would also benefit it since restoration of trading would result in its improved image, apart from giving it access to funds from the capital market.

In addition, the matters pertaining to 42 companies that were active on the then Karachi Stock Exchange, but suspended on the other exchanges was taken up by the SECP with the respective management of the erstwhile exchanges. In the interest of the shareholders, the SECP and the erstwhile exchanges, through collaborative efforts, rectified the default of most of the companies at those stock exchanges resulting in 36 of these companies being traded on normal counter of PSX, while six companies still remain suspended at PSX.

Finally, in case of 25 companies, after hearing the respondents, 18 proceedings have been concluded with punitive orders, and seven proceedings have been held in abeyance as respondents have ensured compliance within specified timelines. Penalties have been imposed on managements and directors of defaulter companies in their personal capacity and amounts to Rs 500,000 per chief executive officer and director.

Under Section 159(c)(i) of the Securities Act, 2015, the amount of penalty can go up to Rs 100 million in case of individual and under sub-section 8 of Section 159, an additional penalty can also be imposed not exceeding the amount of loss caused. Going forward, all listed companies would be monitored for compliance with listing regulations and other applicable legal framework so that the interests of the public are protected and quality of listing at PSX is improved. Steps are being taken to revamp the listing process to make it efficient and transparent with PSX playing due role of a frontline regulator.

The defaults committed by the aforesaid companies included their failure to hold two consecutive annual general meetings, their failure to pay outstanding annual listing fee, penalty imposed or any other dues payable to stock exchanges or their failure to join the Central Depository System (CDS).