SECP receives complaint against PECO secretary for withholding form submission

February 15, 2025 (MLN): The Securities and Exchange Commission of Pakistan (SECP) received a complaint from Muhammad Asad Islam Mahni and Socrat Aman Rana, Directors appointed by State Engineering Corporation.

The complaint alleged that the company secretary of Pakistan Engineering Company Limited (PSX: PECO) did not endorse the duly filled forms for uploading and onward submission to the commission.

This is with reference to the appointment of Muhammad Asad Islam Mahni as Chairman/Director, Socrat Aman Rana as Managing Director/Director of PECO, and Holding of the 70th, 71, 72, 73rd and 74th Annual General Meetings of PECO on February 17, 2025.

In this regard, the subject complaint was forwarded by the commission to the company secretary of PECO via email to provide his comments on the non-endorsement of the said forms, according to the letter by SECP.

The company secretary responded to the commission on the subject complaint vide letter forwarded through email which was not found cogent owing to the following:

From the perusal of Article 79 and Article 85 of the Articles of Association (AOA) of PECO, it appears that the Federal Government or the State Engineering Corporation shall appoint a Managing Director (MD) and chairman of the board of PECO.

Therefore, the AOA is binding on the company and as per the AOA of the company, the shareholders through mutual consent have given the right to State Engineering Corporation to appoint MD and chairman on the board of PECO.

It is also endorsed by the letter written by the company secretary-PECO, Anwar Aziz addressed to the Ministry of Industries and Production which affirms the aforementioned position and the company secretary in the said letter itself requested the Federal Government to appoint MD and Chairman on the board of PECO.

Moreover, the referred opinion in response is misplaced as the same was with respect to the application of the Economic Reform Order, 1972, or the Companies Act, 2017, and that has nothing to do with the instant matter regarding the appointment of MD and Chairman on the board of PECO.

“The aforementioned position remains undisputed to this date and commission has been consistently followed”, the letter added.

The practice of ratification by the board in your letter is not provided in the AOA and has no bearing on the appointments made by State Engineering Corporation and therefore cannot be subject to approval from the board as referred in the letter.

This office has sufficient proof that you have been approached by the complainant and commission have specifically denied to process the subject forms.

Hence, the statement at para 2 of your letter is incorrect and mala fide and the entire letter contradicts with your earlier position taken vide letter dated December 23, 2024.

Therefore, the forms submitted by the nominees of State Engineering Corporation should have been endorsed and forwarded without delay.

In view of the aforementioned unambiguous legal position, where the commission office has failed to perform its duty in accordance with the AOA of the company.

Therefore, the concerned registrar is constrained to accept the relevant forms in order to ensure that the company is governed in accordance with the law and terms of the AOA.

“In view of the above, you are directed to ensure that the MD is able to perform its duties in accordance with the law and no further hindrance is placed”, the letter reads.

Further, all officers are directed to cooperate and facilitate the MD and the chairman of the board in performing their functions.

They must also ensure that the planned AGMs on February 17, 2025, are chaired by the newly appointed chairman of the board in accordance with subsection 5 of section 134 of the Companies Act, 2017, and the relevant articles of the company.

The commission is also in receipt of the complaint from State Engineering Corporation, wherein concerns have been raised with respect to probable alterations in the AOA of PECO in the upcoming AGMs.

In this regard, you are advised to ensure that no other businesses shall be transacted and no agenda item shall be discussed, other than the agenda items disclosed in the notices of AGM dated January 27, 2025, in the upcoming 70th, 71, 72nd, 73rd and 74th AGMs of PECO to be held on February 17, 2025.

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