ISLAMABAD: Security and Exchange Commission of Pakistan (SECP) initiated 54 show-cause proceedings and concluded 50 current proceedings against the erring management and companies’ auditors for various violations of the Ordinance.
These show-cause launched during October and November 2016, said in statement issued by SECP here on Thursday.
The department has adopted focused approach towards certain regulatory areas to ensure meticulous compliance which includes inter corporate financing, mandatory maintenance of website and submission of quarterly reports.
The SECP, after giving the companies reminders through media to have mandatory company’s website rendering critical information to current and potential investors, initiated 17 new show-cause proceedings against those who failed to do so.
The relevant department also concluded 13 pending proceedings against delinquent companies.
The mandatory website, with the promulgation of New Companies Ordinance, 2016, shall also host the placement of annual and quarterly accounts, in addition to electronic transmission to the SECP and shareholders, which shall improve the filing of annual and quarterly accounts.
The department concluded 14 proceedings initiated for delay/non-filing of quarterly accounts, penalized companies to send the message that SECP shall not tolerate holding back of critical financial information to the shareholders.
The SECP also took a stern action against those companies that passed on undue benefit to their associated companies by extending huge funds under the garb of abnormal trade debts, without the approval of the shareholders.
The companies did not recover any markup on such funds which were mobilized and exposed the company’s liquidity to undue stress.
The department has strengthened its focus on the quality of audits and proceedings against auditors of a company for not discharging their duties in line with applicable provisions and failure to bring out misrepresentation in the financial statements of the company. Instances were observed where private companies having paid-up capital above Rs7.5 million had appointed unqualified person as their statutory auditors.
The unqualified persons appointed as statutory auditors lack the knowledge and training required to undertake the audit. In most cases, they were not even familiar with the content and format of the audit report laid down by the Companies Ordinance, 1984.
During the month the department penalized an unqualified person appointed as statutory auditors of a private company. The department launched investigation against a listed company for providing incorrect information in its prospectus at the time of public offering, which despite subsequent communication by the department was not provided to the SECP.
