This Order shall dispose of the application of Guardian Securities (Private) Limited ("Company") for grant of certificate of registration as a broker under the Brokers and Agents Registration Rules, 2001 ("the Rules"), forwarded to the Securities and Exchange Commission of Pakistan ("Commission") by the Lahore Stock Exchange (Guarantee) Limited ("LSE").
2. The detailed scrutiny of the inforrnationidocuments attached with the application ]br grant of certificate or registration revealed that financial position of the Company was severely deteriorated as the Company defaulted its loans payable to the bank(s). The Company also failed to provide its audited financial statements as ofJune 30, 2011.
Apart from the deteriorating financial health, the Company was also facing serious unresolved management conflicts, The Company had no proper Board of Directors as the Chief Executive Officer ("CEO")/Nominee Director of the Company had resigned on September 15. 2010 and the Company was still declaring him as its CEO, The change of nominee director of the Company neither reported to nor notified by the LSE. Moreover, the present directors did not fulfill the experience criteria as stipulated in Rule 4(11) of the Rules.
4, In order to decide the matter on merit, an opportunity of hearing was provided to the Company in Lernis of Rule 5(4) of the Rules to appear and argue its caw on December 19, 2011, The hearing was attended by Mr, Abdul Mansoor Khan and Mr_ Tariq Junaid ("Representatives") of the Company. The deficiencies referred to at Para 2 & 3 above were Fully explained to the Representatives during the course of hearing. The Representatives stated that the management conflicts would be resolved subsequent to renewal of registration of the Company.
However, the Representatives could not provide any time bound plan to improve the financial condition of the Company, Being not agreed with the argument of the Representatives, they were advised to resolve the management related issues before approval of the certificate of registration. Moreover, during die course of hearing the Representatives were advised to submit certain documents before January 3, 2012 to enable the Commission to consider the application or the Company for registration as a broker. flovirrever, the Company failed to provide the documents with in stipulated time period.
5. Based on the deficiencies highlighted at Para 2 & 3 above, 1 ann of the view that allowing the Company to undertake securities business is not in the interest of investors and the stock market; hence the applicant is not eligible for registration as a broker. The same ract was also pointed out by ISE vide its letter dated November 1 7, 2011; wherein the LSE has stated that allowing the company to undertake the securities business shall not be in the interest of investors. Thus the application of the Company for grant of Certificate of Registration as a broker under the Rules cannot he processed, hence refused in terms of Rule 5(5) of the Rules,