SOHAIL SARFRAZ

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has said that the provisions of the Companies Ordinance extend to the whole of Pakistan only and the holding of Annual General Meeting (AGM) outside Pakistan would create legal complications and deprive the shareholders to participate in the general meeting effectively and objectively.

This has been stated by Director Corporatisation and Compliance Department of the commission before the Appellate Bench-IV of the SECP during hearing of an appeal filed by a petroleum company on the issue of holding AGM outside Pakistan.

According to the bench order, the order is in appeal No. 57 of 2013 filed under section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 against the direction passed by the Respondent (Director Corporatisation and Compliance Department SECP).

The facts leading to the case are that M/s Dewan Petroleum (Pvt) Limited (Appellant) incorporated in Pakistan decided to hold the Annual General Meeting (AGM) on 30/04/13 in Dubai, United Arab Emirates (UAE). The Respondent vide its letter dated 17/04/13 refrained the Appellant from holding the AGM outside Pakistan stating that the holding of a general meeting in an area not forming part of Pakistan would be questionable in the eyes of the law in light of section (1)(1) of the Companies Ordinance, 1984 (Ordinance), the provisions of which extend to the whole of Pakistan only.

The company had preferred to file the instant appeal against the direction of the Respondent (Director SECP) on the grounds that the Impugned Order failed to point out any prohibition on the holding of an AGM outside Pakistan. The Ordinance does not bar any company whether listed, public limited or private limited from holding its AGM away from the town of its registered office. It is clear from the provision of section 158(2) of the Ordinance that there is no blanket prohibition even in the case of a listed company and only listed companies are required to seek permission from the Commission before holding such AGMs. Clause 13 of the Articles of Association of the Appellant provides that its AGM shall be held at “places as may be prescribed by the Directors”. Further, the order prohibiting the Appellant from holding AGM in Dubai, UAE was issued ex parte without providing an opportunity to the Appellant to explain its position. The actions, therefore, taken by the Respondent are prima facie defective and liable to be set aside on this ground alone.

The Director SECP had rebutted the arguments on the grounds that there is no provision in the Ordinance which allows a private company to hold the AGM at their discretion. The provisions of the Ordinance extend to the whole of Pakistan only and the holding of AGM outside Pakistan would create legal complications and deprive the shareholders to participate in the general meeting effectively and objectively, order said.

It said that the representatives of the Appellant (company) and the Respondent (Director SECP) at the hearing on 01/02/16 informed the Appellate Bench that the overdue AGM for the year 2013 (Year ended 31/12/12) has subsequently been held on 30/04/14 at the Company’s registered office Islamabad.

In view of the foregoing, that the AGM has already been held at the Company’s registered office, the Appeal, therefore, has become infructuous and dismissed accordingly, order of the Appellate Bench-IV of the SECP added.