This Order shall dispose of the proceedings initiated against M/S Service Fabrics Limited (hereinafter referred to as the "Company") and its directors for default made in complying with the provisions of Sub-section (1) of Section 158 and Sub-section (1) of Section 245 of the Companies Ordinance, 1984 (the "Ordinance").
2. The company was required to hold its AGM on or before 31st March 2003 for the financial year ended 30th September 2002 in accordance with the provisions of Sub-section (1) of Section 158 of the Ordinance, but its management failed to report compliance with the statutory requirement.
Thus, a show cause notice dated April 10, 2003 was issued to the Company and its directors calling upon them to show cause in writing as to why penalty as provided under Sub-section (4) of Section 158 read with Section 476 of the Ordinance may not be imposed upon them for the aforesaid contravention.
3. The company also failed to prepare and transmit to the members and simultaneously file with the Commission quarterly accounts for the period ended December 31, 2002. Therefore, a show cause notice dated April 10, 2003 under section 245 of the Ordinance, was also issued to its directors calling upon them to show cause in writing as to why penalty as provided under Sub- section (3) of Section 245 read with Section 476 of the Ordinance may not be imposed upon them for the aforesaid contravention.
4. In reply to the aforesaid show cause notices Mr. S. M. Ahsan Raza, nominee director of NIT submitted that the company belongs to a management, which has a very poor record of corporate governance, and NIT had been consistently pursuing them especially with reference to another company of the group for compliance but all that went in vain and as a protest NIT withdrew its nominee from the Board of the company on April 19, 2003. It was further submitted that, Mr. Raza specifically mentioned in his resignation that he couldn't continue as director when the management of the company has been defaulting in holding the AGM and preparing quarterly accounts. No reply was, however, received from the other directors. In order to give an opportunity of personal hearing the case was fixed for July 29, 2003, but, no one appeared, instead a letter dated July 28, 2003 was received from the Company's Secretary in which he requested for some time due to non-availability of some directors. The case was, therefore, re-fixed for August 18, 2003 and was finally heard on September 18, 2003. Mr. Ralph Nazirullah, Company Secretary appeared and pleaded the case on behalf of the directors.
5. Mr. Ralph Nazirullah, Company Secretary admitted the default and contended that the default was due to financial constraints faced by the Company and requested for a lenient view. Mr. Ralph also gave assurance for future compliance.
6. I have given due consideration to the submissions made by the Company Secretary.
Though the default is admitted yet the financial difficulties indicated by the Company's Secretary appears to be convincing.
7. However, keeping in view the respondents assurance to be compliant in future, I am inclined to take a lenient view and, impose a fine of Rs. 10,000/-, for non-holding of AGM. For the default in submission of quarterly accounts for the period ended December 31, 2002, I, considering the fact that the management has subsequently filed the accounts on March 12, 2003, impose a fine of Rs.
5,000/-. The above fines are imposed on the Chief Executive of the Company.
8. The Chief Executive of the company is directed to deposit the fine imposed upon him i.e. Rs.
15,000/- in the designated bank account maintained in the name of Securities and Exchange Commission of Pakistan with Habib Bank Limited within thirty days from the receipt of this order and furnish the receipted challan to the Commission.