Through this Order, I propose to decide the case pertaining to delay in transfer of shares of M/S Quice Food Industries Limited, a company limited by shares and listed on the Karachi Stock Exchange (hereinafter called the "Company").
2. The facts leading to this case, briefly stated, are that M/S Deutsche Bank filed a complaint with the Commission against the Company through its letter dated April 16, 2002 regarding non-receipt of 100,000 shares, lodged with the Company on September 29, 2000 for transfer in the name of its client M/S KASB Premier Fund Limited.
3. As the Company has prima facie contravened the provisions of Sub-section (1) of Section 74 of the Ordinance, therefore, a notice dated June 18, 2002 was served on the Company, its Chief Executive, Directors, Company Secretary and Chief Accountant of the Company calling upon them to show-cause in writing as to why the penalties as provided for in Sub-section (2) of Section 74 of the Ordinance, may not be imposed for the aforesaid contravention.
4. The reply to the show cause notice was received on June 25, 2002. In order to give an opportunity of personal hearing, the case was fixed on June 26, 2002. Mr. Muhammad Afaq Shamsi, Chief Executive of the Company appeared on the date of hearing and argued the case. He stated that delay in transfer of 100,000 shares received from M/S Deutsche Bank was due to some internal problems. It was also informed that the Company has already returned the said shares to Deutsche Bank. It is pertinent to note that 400,000 shares were deposited by M/S Deutsche Bank with the Company on September 29, 2000 for transfer in the name of M/S KASB Premier Fund Limited. Out of these, 300,000 shares were returned by the Company on September 19, 2001 after a lapse of about one year. The balance 100,000 shares were returned after a lapse of one year and seven months.
5. Before proceedings to decide this case, I consider it necessary to advert to the provisions of the Ordinance, which have prima facie been violated by the Company. Sub-section (1) of Section 74 requires that every company shall within forty five days after the application for transfer of shares complete and have ready for delivery the certificate of all shares and unless sent by post or delivered to the person entitled thereto, within that period, shall give notice of this fact to the shareholders immediately thereafter in the manner prescribed. The provisions of Subsection (1) of Section 77 provides that the directors of company shall not refuse to transfer any fully paid up shares unless the transfer deed is, for any reason, defective or invalid. The Companies Ordinance also provides a procedure for refusal of transfer of shares. Sub-section (1) of Section 78 provides that if a company refuses to register transfer of any share, the Company shall within thirty days after the date on which the instrument of transfer was lodged with the company send to the transferee notice of refusal indicating reasons for such refusal. It is to be noted that the shares in listed companies are freely transferable. Where the documents for the transfer, complete in all respect, are lodged with the company, the transferee becomes entitled to be registered as a member of the company.
6. In the case in hand, the Company has not refused the transfer of shares. The return of shares after a lapse of one year and seven months is a serious violation and cannot be condoned. The Chief Executive has not been able to give justifiable excuse for the delay in transfer and return of shares to M/S Deutsche Bank. Under the circumstances, the delay in transfer of shares is considered deliberate and the Company, its Chief Executive and Company Secretary have been found to be knowingly and willfully party to the said default. They are mainly responsible for ensuring the transfer and return of shares within the time limit prescribed under the law.
7. As the Company has now transferred the shares, therefore, I take a lenient view and impose a fine on the Company, its Chief Executive and Company Secretary, who are mainly responsible for the aforesaid default, amounting to Rs. 26,500/- (twenty six thousand five hundred) each calculated @ Rs. 50 per day instead of Rs 100 /- per day after admissible period of 45 days under Sub-section (1) of Section 74 of the Ordinance.
8. The, Company, its Chief Executive and Company Secretary are directed to deposit the fine aggregating Rs. 79,500/- (Rupees seventy nine thousand five hundred) in the designated bank account of Securities and Exchange Commission of Pakistan, maintained with Habib Bank Limited within 30 days of the date of this Order and furnish a receipted challan to the Securities and Exchange Commission of Pakistan. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.