Business Topic 04 Assignment

 Key Contributions of Legal Precedents to shape SECP’s Regulatory Compliance
1. The decisions of case laws related to SECP assist to clarify the basic provisions of law
such as the Companies Act, 2017 and the Securities Act, 2015, by describing each
sections principle central point for a uniform application in every forthcoming issue,
serving as a legal benchmark.
2. Through past decisions on corporate problems SECP emphasizes compliance with
principles of transparency and accountability.
For example, the judgments concerning mismanagement or shareholder disputes
reinforce corporate governance norms
3. Investors’ interests can be safeguarded through past legal decisions, by the address of
issues such as insider trading, market manipulation, and fraudulent schemes.
4. They can help improve standards among all the corporate sectors by providing a non-
ambiguous layout for business practices.
5. These case laws can address loopholes, ambiguities, and application of each legal
provision in a different corporate scenario.
 Case Laws Showing Challenges in Compliance Regulation

1. Abdullah Khan Usmani v. Securities and Exchange Commission of Pakistan (SECP)
[Civil Original No.227628 of 2018 LHC]
 Facts of the case
 The petitioner was one of the directors of the company, having 29000 shares out of
30000.
 His company ran the business of Hajj and Umrah since the year 2005 to 2008.
 He submitted an annual return for the year 2006 and 2007 only.
 Due to being caught up in a financial crisis, the petitioner moved to UAE in 2008 to work
as an employee in a Travel Agency.
 When he returned to Pakistan in the year 2015, he was informed about the transfer of his
shares to the respondent without his consent or knowledge.
 As per the statement of the petitioner, he approached the Securities Exchange
Commission, SECP for assistance, but the management refused to extend a helping hand.
 Issue of Case
The Petitioner invoked Section 126 of the SECP Act by making a prayer to rectify the register
of the Company and he has also made multifarious prayers; one of which demand that the
Respondents No.2 to 4 not to be entitled to get any quota of Hajj from the Ministry.
This moot point requires the interpretation of Section 126 of the Act by discussing in detail the
words used in it, including.
(i) Fraudulent.
(ii) Sufficient cause.
(iii) omitted/entered.
 Judgment
The case deals with the allegations of corporate fraud involving financial misconduct and the
distinct role of SECP to initiate its legal authority in regulating such issues. The matter was
stipulated in the Lahore High court assessed the role of SECP in compliance with its
significant statutory provisions and constitutional guarantee.
The judgment primarily emphasized on SECP’s critical role to ensure fairness in procedure
and transparency during regulatory investigations. It also underscores the commissions
responsibility to ensure compliance with corporate law and safeguarding the rights of
company members and stakeholders.1
2.Equity Master Securities (Pvt.) Limited & 03 others Versus Pakistan Stock Exchange
Limited & 937 others [C. O. No. 14225 / 2023 LHC]
3.Facts of the case
 The company was incorporated as a Private Limited company on 26.03.2008

under the Companies Ordinance, 1984.
 The company is licensed, and its business is authorized to offer services as a
Broker, license is issued by the SECP.
 Furthermore, due to difficult economic conditions suffered because of the market
impact of COVID-19 pandemic, non-receipt of payments and expenses spent on
1
Lahore High Court Bulletin, Fortnightly Case law update Online Edition, Volume-IV, Issue-
XXII, 16-11-23 to30-11-23 | Published by, Research center Lahore High court, Lahore
false and fabricated cases instituted against the company, the equity of the
company has turned negative.
 Any other such losses cannot be sustained by the company. Hence, it would be
most suitable to initiate the Winding-up process of the company.
 After, the company had filed for winding up, the SECP and PSE challenged the
maintainability of this petition asserting that the company and its contributories
cannot proceed with such a request and are barred are to do so unless satisfying the
SECP that the company has settled or terminated all of its liabilities and
outstanding claims of the investors as per 'Default Regulations' of the PSE and
have obtained prior approval of SECP in this regard.
 It was also informed that the SECP passed an investigation order under Section
139 of the ACT into the affairs of the company.
 SECP held that this petition was meant to prejudice the investigation process and
that the company has concealed facts with mala fide intention to obtain the
winding up order.
 The respondents demanded that Section 382(a) of the act be invoked by the court,
to refuse the winding up process of the company until the facts have become clear
in the companies favor after the completion of the investigation.
Judgment
In view of the above, the titled winding up Petition is dismissed and in consequence thereof,
all pending applications having become infructuous are also disposed of.
 Case laws Demonstrating SECP’S Effectiveness
1.SECP vs Azgard Nine Limited (ANL) - Criminal Complaint 2007
4.Facts of the case

 SECP performed an analysis of the trading data of the Karachi stock exchange, and it
disclosed that during 73 trading sections between the duration of April 2, 2007, and July
13, 2007, unusual spikes in trading volume and price of ANL share was noted.
 This data reflected an abnormal average in the daily trading volume of 3.5 million shares,
reaching its peak at 10.8 million shares on April 20, 2007.
 This abnormal increase in price and volume indicated manipulation tactics of the
company and trading data showed concerted buying and selling among clients of JS
Global Capital and Aziz Fida Hussain & Company.
 The SECP after proper investigation filed a criminal complaint against 06 companies and
17 individuals involved in the manipulation of ANL share price and volume2.
 SECP has filed a criminal complaint in the competent Court of Law against six
Companies and seventeen individuals involved in the manipulation of ANL share price
and volume.
 Conclusion
The SECP's case against ANL and its associated entities emphasized the regulatory body's
commitment to maintaining market integrity through addressal of alleged share price
manipulations. The proceedings also highlight the complexities of prosecuting financial
misconduct and the importance of robust evidence to achieve successful legal outcomes.
2. Tandlianwala Sugar Mills Limited v. Securities and Exchange Commission of

Pakistan (2024 CLD 740)
 Facts of the Case
1. In this case the SECP penalized the appellant for failure in appointing
independent directors in the company as according to the provisions mandated
by regulation 06 of the Listed companies (Code of Corporate Governance)
Regulations, 2019, and Section 166 of the Companies Act, 2017.
2
The Express Tribune, Dated: April 25th, 2013fo
2. The Counsel for the Appellant argued that the appointment of independent
directors in the company is not a strict requirement under the act and that the
respondents did not take notice of this while passing the impugned order.
3. They further argued that the appointment of an independent director is not a
requirement under section 166 of the act, nor it is mandatory or directory in
nature.
4. The Counsel for the Appellant further submitted that the impugned order
comprises “principle of doubtful penalization and that the SECP has not yet
decided the appellants application for relaxation under section 166(6)(b) of the
act and henceforth the penalty imposed is against the law.
 Judgment
The appellate bench upheld that the use of words such as “Shall’” and “mandatory” in
the aforesaid sections related to the appointment of independent directors leave no room
for ambiguity as to the provision of the law and the intent is clear. Thus, the bench
upholds the penalty of the impugned order issued by the SECP and does not find any
reason to interfere with it.
The appeal as to merits of the case is dismissed.
5. Addressing Non-Statutory Service Rules and Constitutional Jurisdiction

In National Engineering Services Pakistan (NESPAK) v. Muhammad Nawaz Cheema
(2023 PLC(CS) 785)
The Lahore High Court described the boundaries and framework of constitutional petitions
concerning the principles of corporate governance. The court ruled that non-statutory service
rules (internal regulations of company created by employers) did not require constitutional
intervention, even when public sector corporate governance was allegedly violated. These
Constitutional petitions, thereby only reinforce the importance of statutory compliance such
as provisions of SECP and Company Act, 2017 in corporate governance matters3.
3
Josh and Mak International Law firm Publications, Article Judicial Attitudes to Corporate
Governance in Pakistan; A review of recent cases
Bibliography
1. https://joshandmakinternational.com/judicial-attitudes-corporate-governance-
in-pakistan/
2. https://ojs.jdss.org.pk/journal/article/view/679/606
3. https://tribune.com.pk/story/540163/secp-files-complaint-against-six-companies?
utm_source=chatgpt.com

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 Key Contributions of Legal Precedents to shape SECP’s Regulatory Compliance

 Case Laws Showing Challenges in Compliance Regulation

3.Facts of the case

 The company was incorporated as a Private Limited company on 26.03.2008

 Case laws Demonstrating SECP’S Effectiveness

1.SECP vs Azgard Nine Limited (ANL) - Criminal Complaint 2007

4.Facts of the case

2. Tandlianwala Sugar Mills Limited v. Securities and Exchange Commission of

5. Addressing Non-Statutory Service Rules and Constitutional Jurisdiction

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