January 11, 2019 (MLN): The Corporate Supervision Department at Securities & Exchange Commission of Pakistan (SECP) has imposed a fine of Rs.10,000 each on 13 Board of Directors of K-Electric Limited, including the CEO, as a result of failing to file the Company’s interim financial statements for the quarters ended December 31, 2016 and March 31, 2017 with the SECP.
Following the failure on K-Electric’s part to file the document, the SECP issued a Show Case Notice to the company to show the cause of the non-filing and how it is justified.
K-Electric through its legal counsel submitted a detailed response explaining that since NEPRA had determined an integrated Multi-Year Tariff (MYT) for a seven year period (July 1, 2016 – June 30, 2023) for the Company, on March 20, 2017, against which the Company had reservations about the MYT not reflecting ground realities. Therefore, a review application was filed by K-Electric wherein their viewpoint was presented.
However, NEPRA’s decision on October 9, 2017 was not in harmony with K-Electric’s concern. The Ministry of Energy (Power Division) then took notice of the situation and filed a ‘Reconsideration’ request with NEPRA on October 26, 2017.
Accordingly, a final determination by NEPRA on MYT was awaited. Since without a final determination on MYT, the quarterly accounts for periods ended December 31, 2016, March 31, 2017 and September 30, 2017 could not be finalized, the financial statements were not filed.
Going on, on April 25, 2018, SECP advised the Company to hold its due AGM’s within three months and lay therein the annual audited financial statements for the year ended June 30, 2017. The Company was also apprised of NEPRA’s feedback letter where the Authority had advised K-Electric to use the tariff determined for the tariff control period FY 2016-17 to FY 2022-2023 for their purpose or to add a note regarding ‘Reconsideration Request being under consideration of NEPRA’.
In response to this, K-Electric sought legal recourse and approached the honorable Sindh High Court against NEPRA’s decision.
The honorable court passed and interim order to Ministry of Energy, GoP, and NEPRA that no adverse action without due process of law shall be taken by defendants against plaintiff in respect of impuged DRR.
However since the order does not debar SECP from taking action vis-à-vis violations of the provisions of the Ordinance, SECP has come to the conclusion that the pertinent provisions of the law have been violated, and therefore imposes a fine of Rs.5000 per quarter on each of the 13 Board of Directors, aggregating to Rs.130,000, to be deposited in the name of SECP within 30 days.
In case of non-deposition, proceedings for recovery of the same as arrears of land revenue will be initiated.
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