Gifts at share holders’ meet to attract penalty

ISLAMABAD: Distribution of gifts at shareholders' meet is an illegal act and the securities watchdog will implement stringent norms to strengthen corporate governance practices and curb misdoings, it said on Tuesday.

The Security and Exchange Commission of Pakistan (SECP) informed the Senate Standing Committee on Finance that the provision of gifts for shareholders on the eve of annual general meeting (AGM) is ‘an illegal activity’ and it would take an action in case of any such violations.

Zafar Hijazi, chairman SECP said no gifts or cash in lieu of gifts is allowed to distribute amongst members at or in connection with the meeting.

“We will not allow… If anything comes into our knowledge then we will take actions,” Hijazi told the Senate panel, which met under the chairmanship of Senator Saleem Mandviwalla at the Parliament House to consider Companies Bill 2017.

The meeting of the committee was held to further consider “The Companies Bill, 2017” as passed by the National Assembly. The Bill aims to reform and re-enact the law relating to companies and for matters connected herewith.

Mandviwalla made it clear that the committee would make changes in the law approved by the National Assembly, “so the SECP should not expect that the law would be passed by the committee without any changes.”

 It was also decided at the meeting that penalty related clauses in the Companies Bill 2017 would be considered separately.

The committee also endorsed prohibition of gifts for shareholders on eve of AGM. The chairman of the committee argued that normal practice was quite different as it was now taken as routine.

SECP chairman made it clear that the watchdog would not allow even a penny as gift for shareholders on eve of AGM. “If we get any information about such violation, we will take action against them,” he said.

For disqualification of directors, the Companies Bill 2017 proposed that insolvent directors of the company would be barred for five years to assume such position and this period was proposed keeping in view the law of UK and India.

Under section 184 of the proposed Companies Bill 2017, the law proposed prohibition regarding making political contribution. For appointment of chief executives, the Companies Bill 2017 placed pre-requisites for appointing chief executives of the companies.  

The meeting was attended by Senators Ilyas Ahmad Bilour, Muhammad Mohsin Khan Leghari, Ayesha Raza Farooq, Saud Majeed, Osman Saifullah Khan and Mohsin Aziz besides senior officials of the relevant authorities of the departments/division concerned.