AIOU SOLVED ASSIGNMENT 2 CODE 460 AUTUMN 2015

AIOU SOLVED ASSIGNMENT 2 CODE 460 MERCANTILE LAW

Q 5 (a): Explain the functions of Securities and Exchange Commission of Pakistan (SECP).

 (b) Explain the penalties for the following cases with reference to Companies Ordinance, 1984

i) Failure to maintain books of accounts

II) Defaults regarding maintenance of annual accounts

Iii) Defaults regarding contents of balance sheet

Iv) Defaults regarding directors' report

i)                    Defaults regarding inspection of books of accounts

Answer (a): The functions of Securities and Exchange Commission of Pakistan (SECP)

1. The Commission shall have all such powers as may be necessary to perform its duties and functions under this Act.

2. The Commission may, having regard to its functions and to exercise its powers efficiently, organize itself into divisions, wing or such other sub-divisions as it may consider expedient.

3. The Commission may, from time to time, identify the matters requiring the Board to make policy decisions and may also make recommendations regarding policy to the Board for its consideration.

4. The Commission shall be responsible for the performance of the following functions:

 a. regulating the issue of securities;

 b. regulating the business in Stock Exchanges and any other securities markets;

c. supervising and monitoring the activities of any central depository and Stock Exchange clearing house;

d. registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue. Underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with the securities markets in any manner;

e. proposing regulations for the registration and regulating the working of collective investment schemes. Including unit trust schemes;

f. promoting and regular imp; sell, regulatory organizations including securities industry and related organizations such as Stock Exchanges and associations of mutual funds, leasing companies and other N 81:Is;

g. prohibiting fraudulent and unfair trade practices relating to securities markets;

h. promoting investors' education and training of intermediaries of securities markets;

i. conducting investigations in respect of matters related to this Act and the Ordinance and in particular for the purpose of investigating insider trading in securities and prosecuting offenders;

j. regulating substantial acquisition of shares and the merger and take-over of companies;

k. calling for information from and undertaking inspections, conducting inquiries and audits of the Stock Exchanges and intermediaries and self-regulatory organizations in the securities market;

I. considering and suggesting reforms of the law relating to companies and bodies corporate, securities markets, including changes to the constitution, rules and regulations of companies and bodies corporate, Stock Exchanges or clearing houses;

m. encouraging the organized development of the capital market and the corporate sector in Pakistan;

n. conducting research in respect of any of the matters set out in this sub-section;

o. performing such functions and exercising such powers of the Authority, including any powers of the Federal Government delegated to the Authority, (other than the power to make any rules or regulations) under the provisions of the Ordinance, the Securities and Exchange Ordinance, 1969 (XVII of 1969), the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980) and under any other law for the time being in force under which any function or power has been conferred on the Authority including, but not limited to, the functions and powers set out in the Schedule to this Act [Omitted)

p. performing such functions and exercising such powers (other than the power to make any rules or regulations) under the Ordinance or any other law for the time being in force as may, after the commencement of this Act, be delegated to it by the Federal Government and exercising any power or performing any functions conferred on it by or under any other law for the time being in force;

q. proposing regulations in respect of all or any of the aforesaid matters for the consideration and approval of the Board(: and)

r. exercising all powers, discharging till duties and performing all functions assigned to the Commission under, and generally administering, the Law of Insurance;

s. ensuring and monitoring compliance by insurers, insurance surveyors and insurance intermediaries of all laws, rules and regulations pertaining to insurance for the time being in force;

t. regulating professional organizations connected with the insurance business; and

u. Encouraging the organized development of the insurance market in Pakistan]

5 Without prejudice to the provisions of sub-section (4), the approval of the Commission shall be required by-

a. all public companies incorporated in Pakistan which intend to issue or offer for sale securities in markets outside Pakistan or to list such securities on a Stock Exchange outside Pakistan, in each case, whether directly or through an intermediary;

b. all bodies corporate incorporated outside Pakistan which or persons who intend to issue or offer for sale, securities to the public in Pakistan or to list such securities on a Stock Exchange; and

c. all bodies corporate incorporated outside Pakistan which are already listed on a Stock Exchange, for the listing of and quotation for any additional securities

6. In performing its functions and exercising its powers, the Commission shall strive-

a. to maintain facilities and improve the performance of companies and of securities markets, in the interest of commercial certainty, reducing business costs, and efficiency and development of the economy;

b. to maintain the confidence of investors in the securities markets by ensuring adequate protection for such investors;

c. to achieve uniformity in how it performs those functions and exercise those powers;

d. to administer laws effectively but with a minimum of procedural requirements;

e. to receive, process, and store, efficiently and quickly, the documents lodged with, and the information given to, it under this Act, the Ordinance or any other law;

f. to ensure that the documents, and the information referred to in clause (e) are available as soon as possible for access by the public: (Omitted)

i. to maintain the confidence of holders of insurance policies by protecting the interests of policy holders and beneficiaries of insurance policies in all matters, including assignment of insurance policies. nomination by policy holders• insurable interest, surrender value of policies of life insurance, and other terms and conditions of contracts of insurance;

ii. to improve existing methods and devise new options for the expeditious settlement of claims and disputes between insurers and policy holders and between insurers and intermediaries;

iii. to promote efficiency in the conduct of insurance business;

iv. to promote the establishment and development of professional and educational organizations connected with insurance business with a view to improving the quality of insurance services in the country;

v. to promote awareness among consumers with respect to the benefits of insurance and the existence of measures to safeguard the interests of mortgagers, mortgagees and potential policy holders: and]

g. To take whatever anion it can take, and is necessary, in order to enforce and give effect to the Act, [the Ordinance, the Law of Insurance! or any other law.

7. The Commission, and the Commissioner or officer to whom any of the functions or powers have been delegated under section 10 may, for the purposes of a proceeding or enquiry, require anyone-

a. to produce before, and to allow to be examined and kept by, an officer of the Commission specified in this behalf, any books, accounts or other documents in the custody or under the control of the person so required, being documents relating to any matter the examination of which may be considered necessary by the Commission or such commissioner or officer; and

b. To furnish to an officer of the Commission specified in this kebab such information and documents in Ins possession relating to any matter as may be necessary for the purposes of the proceeding or enquiry. Every company has to keep at its registered office proper Books of Accounts in respect of following:

a) All accounts of money received and expended and relevant matters connected with such receipt or expenditure.  

b) All sales and purchases of goods.

c) All assets.

d) All liabilities.

e) In case of company engaged in production, processing, manufacturing or mining activities. such particulars relating to utilization of materials or labour or other inputs or prescribed items of cost if such class of companies is required by the Corporate law Authority (CIA) by a general or special order to include such particulars in books of accounts. The books of account and other hooks shall be open to inspection by the directors during business hours. The Ordinance requires that books of account of at least preceding ten years have to be preserved in good order by every company.

INSPECTION OF BOOKS OF ACCOUNTS BY REGISTRAR:-

The books of account and books and papers of every company shall be open to inspection by the Registrar of joint Stock Companies or his representative if he considers it necessary to do so. Every director and officer of the company must provide full cooperation and assistance to the Registrar or his representative in this respect. ANNUAL ACCOUNTS AND BALANCE SHEET:- The requirements of law in respect of these are summarized below:

(a) The directors of every company must present at the annual general meeting the balance sheet and profit and loss account or in the case of a company not trading for profit, an income and expenditure account.

(b) The statements mentioned in (a) above must he presented according

To following timings:

i. Within not later than eighteen months after its incorporation in case of a new company. ii. Once at least of a new company.

(c) These financial statements must be prepared for a period not exceeding twelve months and should not be made up to a date which is more than six months front the last date of the meeting. Moreover, these statements should start form;

i. The date of incorporation in case of first accounts; and

ii. The date of proceeding accounts subsequently.

(d) The balance sheet and profit and loss account or the income and expenditure account must be audited by an auditor. The auditor's report has to be attached with these statements.

(e) Every balance must send a copy of the audited balance sheet or income and expenditure account along with auditor's report to every member at least twenty-one days before the meeting at which it is to be laid before the members.

(f) The balance sheet and profit and loss account are required to be approved by the directors and signed by the chief executive and at least by one director. In case of the absence of the chief executive from the country the accounts may be signed by two directors but a statement containing reasons for non-compliance is required to be annexed to such accounts.

Answer (b): Penalties for Non-Compliance

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