This Order will dispose of the proceedings initiated under 159(5) of the Securities Act, 2015 (Securities Act) by the Securities and Exchange Commission of Pakistan ("Commission") through Show Cause Notice No. 1(39)SMD/LCID/2015 dated September 16, 2015 ("Notice") issued to Mr. Akbar Khan Durrani ("Respondent").
2. The facts of the matter leading up to aforesaid Notice are that Al Shaheer Corporation Limited ("Al Shaheer Limited") pursuant to Prospectus approved by the Commission, offered 18,750,000 Ordinary Shares through Book Building process to Institutional Investors and High Net worth Individuals at the floor price of Rs 43 per share. The Prospectus was published in Daily Business Recorder on June 05, 2015, June 09, 2015 and Daily Dunyia on June 09, 2015, for the information of all concerned/general public. The term High Net worth Individual was defined in the Prospectus as "individual investor who applies or bids for shares of the values of PKR 1,000,000 or above in the book building process".
3. The Commission at the time of approval of the prospectus inter alia imposed a condition, which was published in the Prospectus that "the eligible investors shall not place consolidated bids. A bid application which is fully or partially beneficially owned by persons other than the one named therein is considered as a Consolidated Bid.
4. The Book Building process was held on June 10 and 11, 2015 and strike price of Rs. 95.00 per share (as per Dutch Auction Method) was determined. 702 bidders participated in the book building process, out of which 384 bidders were notified as successful by the book runners. The Respondent also participated in the Book Building process and was allocated 6,000 shares of Al Shaheer Limited.
5 The Commission carried out an investigation into the Book Building process of Al-Shaheer Limited. The Investigation Team recorded statements of some of the bidders, including the Respondent. During the process of recording of statement by the investigation Team, it was admitted by Respondent that the money was contributed by him and his friend. Thus, it appeared that the Respondent has placed a consolidated bid on behalf of himself and his friend, in violation of Section 87 of the Securities Act, which attracts penal provisions of Section 159(5) of the Securities Act, which provides as under:- 159 (5) Notwithstanding sub-sections (1), (2), (3) and (4), any person who
(a) contravenes or fails to comply with any provision of this Act, or of any rules or of any regulations made under this Act;
(b) furnishes or produces any return, document or statement for the purposes of this Act requirement imposed under the provisions of this Act or of any rules or regulations NIC Building, Jinnah Avenue, Blue Area, Islamabad, Pakistan PABX: 9207091-94 (102), TEL: 92-51-9100458, FAX: 92- 51-9100440 i under this Act, the contents of which, to his acknowledge, are untrue, incorrect or misleading; or
(c) obstructs or contravenes or does not comply with any order or direction of the Commission, including an employee of the Commission, or an authorized person or investigator, in the performance of his duties under this Act, shall be liable to pay by way of penalty--
(1) in the case of an individual, such sum which may extend to one hundred million rupees; and (ii)
6. The Commission took cognizance of the matter and issued the Notice to the Respondent under Section 159(5) of the Act calling upon him to explain through written reply alongwith documentary evidence, if any, as to why penalty may not be imposed upon him under section 159(5) of the Securities Act for aforesaid violation. The Respondent vide letter October 31, 2015 submitted his written response to the Notice and requested that he may be adjudicated on the basis of his response.
Nevertheless, the matter was scheduled for hearing on November 03, 2015 at the Commission head office, Islamabad. However, the Respondent did not appear before me on the said date.
7. In order to arrive at decision, I have considered the submissions made by the Respondent in writing, which may be summarized as under; a) He is neither associated with any stock dealer nor active trader in stock market. b) He participated first time in book building process. c) He is a salaried person and was short of fund, therefore, he obtained loan from his friend Mr. Asif and has sold the shares at loss to refund the loan to his friend. d) He requested for condonation of the default, which was committed unintentionally.
8. I have considered submissions made by the Respondent in writing. The Respondent has admitted the default with the contention that it was committed unintentionally. Considering the submissions made by the Respondent and the facts stated above, I am taking a lenient view of the matter and not imposing any monetary penalty on the Respondent. However, the Respondent is hereby strictly warned to ensure compliance of regulatory framework, in future.
9. This Order is issued without prejudice to any other action that the Commission/Registrar may initiate against the Respondent in accordance with the law on matter subsequently investigated or brought to the Notice of the Commission.