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For business information, annual reports, laws, ordinances, regulations and articles. |
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PART
X
PREVENTION OF OPPRESSION AND MISMANAGEMENT
290.
Application to Court.-- (1) If any member or members holding not less than twenty per
cent of the issued share capital of a company, or a creditor or creditors having interest
equivalent in amount to not less than twenty per cent of the paid-up capital of the
company, complains or complain or the registrar is of the opinion, that the affairs of the
company are being conducted, or are likely to be conducted, in an unlawful or fraudulent
manner, or in a manner not provided for in its memorandum, or in a manner oppressive to
the members or any of the members or the creditors or any of the creditors or are being
conducted in a manner prejudicial to the public interest, such member or members or, the
creditor or creditors, as the case may be, the registrar may make an application to the
Court by petition for an order under this section.
(2) If on any such petition the Court is of opinion--
(a) that the company's affairs are being conducted, or are likely to be conducted, as
aforesaid; and
(b) that to wind up the company would unfairly prejudice the members or creditors;
the Court may, with a view to bringing to an end the matters complained of, make such
order as it thinks fit, whether for regulating the conduct of the company's affairs in
future, or for the purchase of the shares of any members of the company by other members
of the company or by the company and, in the case of purchase by the company, for the
reduction accordingly of the company's capital, or otherwise.
(3) Where an order under this section makes any alteration in, or addition to, a company's
memorandum or articles, then, notwithstanding anything in any other provision of this
Ordinance, the company shall not have power without the leave of the Court to make any
further alteration in or addition to the memorandum or articles inconsistent with the
provisions of the order; and the alterations or additions made by the order shall be of
the same effect as if duly made by resolution of the company and the provisions of this
Ordinance shall apply to the memorandum or articles as so modified accordingly.
(4) A copy of any order under this section altering or adding to, or giving leave to alter
or add to, a company's memorandum or articles shall, within fourteen days after the making
thereof, be delivered by the company to the registrar for registration; and if the company
makes default in complying with this subsection, the company and every of officer of the
company who is knowingly and willfully in default shall be liable to fine which may extend
to five thousand rupees and to a further fine not exceeding one hundred rupees for every
day after the first during which the default continues.
(5) The provisions of this section shall not prejudice the right of any person to any
other remedy or action.
291. Powers of Court under section. 290.-- Without prejudice to
the generality of the powers of the Court under section 290, an order under that section
may provide for--
(a) the termination, setting aside or modification of any agreement, howsoever arrived at
between the company and any director, including the chief executive, managing agent or
other officer, upon such terms and conditions as may, in the opinion of the Court, be just
and equitable in all the circumstances;
(b) setting aside of any transfer, delivery of goods, payment, execution or other
transactions not relating to property made or done by or against the company within three
months before the date of the application which would, if made or done by or against an
individual, be deemed in his insolvency to be a fraudulent preference; and
(c) any other matter, including a change in management, for which in the opinion of the
Court it is just and equitable that provision should be made.
292. Interim order.-- Pending the making by it of a final order
under section 290 the Court may, on the application of any party to the proceedings, make
such interim order as it thinks fit for regulating the conduct of the company's affairs,
upon such terms and conditions as appear to it to be just and equitable.
293. Claim for damages inadmissible.-- Where an order of the
Court made under section 290 terminates, sets aside, or modifies an arrangement, the order
shall not give rise to any claim whatever against the company by any person for damages or
for compensation for loss of office or in any other respect, either in pursuance of the
agreement or otherwise.
294. Application of certain sections to proceedings under this
Part.-- In relation to an application under section 290, sections 410 to 415 shall
mutatis mutandis' apply as they apply in respect of winding up.
295. Management by Administrator.-- (1) If at any time a creditor
or creditors having interest equivalent in amount to not less than sixty per cent of the
paid-up capital of a company, represents or represent to the Authority that--
(a) the affairs or business of the company are or is being or have or has been conducted
or managed in a manner likely to be prejudicial to the interest of the company, its
members or creditors, or any director of the company or person concerned with the
management of the company is or has been guilty of breach of trust, misfeasance or other
misconduct towards the company or towards any of its members or creditors or directors;
(b) the affairs or business of the company are or is being or have or has been conducted
or managed with intent to defraud its members or creditors or any other person or for a
fraudulent or unlawful purpose, or in a manner oppressive of any of such persons or for
purposes as aforesaid; or
(c) the affairs of the company have been so conducted or managed as to deprive the members
thereof of a reasonable return; or
(d) any industrial project or unit to be set up or belonging to the company has not been
completed or has not commenced operations or has not been operating smoothly or its
production or performance has so deteriorated that--
(i) the market value of its shares as quoted on the stock exchange or the net worth of its
share has fallen by more than seventy-five per cent of its par value; or
(ii) debt equity ratio has deteriorated beyond 9:1; or
(iii) current ratio has deteriorated beyond 0 5: 1; or
(e) any industrial unit owned by the company is not in operation for over a period of two
years or has been in operation intermittently or partially during the preceding two years;
or
(f) the accumulated losses of the company exceed sixty per cent of its paid-up capital;
and request the Authority to take action under this section, the Authority may, after
giving the company an opportunity of being heard, without prejudice to any other action
that may be taken under this Ordinance or any other law, by order in writing, appoint an
Administrator, hereinafter referred to as the Administrator within sixty days of the date of receipt of the representation, from
a panel maintained by it on the recommendation on the recommendation
of the State Bank of Pakistan to manage the affairs of the company subject to such
terms and conditions as may be specified in the order:
Provided that the Authority may, if it considers
it necessary so to do, for reasons to be recorded, or on application of the creditors on
whose representation it proposes to appoint the Administrator, and after giving a notice
to the State Bank of Pakistan, appoint a person whose name does not appear on the panel
maintained for the purpose to be the Administrator.
Explanation.-- For the purposes of clause (c), the members shall be deemed to have been
deprived of a reasonable return if, having regard to enterprises similarly placed, the
company is unable to or does not, declare any or adequate dividend for a period of three
consecutive years.
(2) The Administrator shall receive such remuneration as the Authority may determine.
(3) On and from the date of appointment of the Administrator, the management of the
affairs of the company shall vest in him, and he shall exercise all the powers of the
directors or other persons in whom the management vested and all such directors and
persons shall stand divested of that management and powers and shall cease to function or
hold office.
(4) Where it appears to the Administrator that any purchase or sales agency contract has
been entered into, or any employment given, patently to benefit any director or other
person in whom the management vested or his nominees and to the detriment of the interest
of the general members, the Administrator may, with the previous approval in writing of
the Authority, terminate such contract or employment.
(5) No person shall be entitled to, or be paid, any compensation or damages for
termination of any office contract or employment under subsection (3) or subsection (4).
(6) If at any time it appears to the Authority that the purpose of the order appointing
the Administrator has been fulfilled, it may permit the company to appoint directors and,
on the appointment of directors, the Administrator shall cease to hold office.
(7) Save as provided in subsection (8), no suit, prosecution or other legal proceeding
shall lie against the Administrator for anything which is in good faith done or intended
to be done by him in pursuance of this section or of any rules made thereunder.
(8) Any person aggrieved by an order of the Authority under subsection (1) or subsection
(10), or of the Administrator under subsection (4) may, within sixty days from the date of
the order, appeal against such order to the Federal Government.
(9) If any person fails to deliver to the Administrator any property, records or documents
relating to the company or does not furnish any information required by him or in any way
obstructs the Administrator in the management of the affairs of the company or acts for or
represents the company in any way, the Authority may by order in writing, direct that such
person shall pay by way of penalty a sum which may extend to one million rupees, and, in
the case of a continuing failure or obstruction, a further sum which may extend to ten
thousand rupees for every, day after the first during which the failure or obstruction
continues.
(10) The Authority may issue such directions to the Administrator as to his powers and
duties as it deems desirable in the circumstances of the case, and the Administrator may
apply to the Authority at any time for instructions as to the manner in which he shall
conduct the management of the company or in relation to any matter arising in the course
of such management.
(11) Any order or decision or direction of the Authority. made in pursuance of this
section shall be final and shall not be called in question in any Court.
(12) The Federal Government may, by notification in the official Gazette, make rules to
carry out the purposes of this section.
(13) The provisions of this section shall have effect notwithstanding anything contained
in any other provision of this Ordinance or any other law or contract, or in the
memorandum or articles of a company.
296. Rehabilitation of companies owning sick industrial units.--
(1) The provisions of this section shall apply to a company owning an industrial unit
which is facing financial or operational problems and is declared as a sick company by the
Federal Government. " "
(2) After a company is declared as a sick company under subsection (1), any institution,
authority, committee or person authorised by the Federal Government in this behalf may
draw up a plan for the rehabilitation, reconstruction and reorganisation of such company,
hereafter in this section referred to as the rehabilitation plan.
(3) Without prejudice to the generality of the foregoing provision, the rehabilitation
plan, may in addition to any other matter, provide for all or any of the following-
(i) reduction of capital so as to provide for all or any of the matters referred to in
section 96 or reconstruction, compromise, amalgamation and other arrangements so as to
provide for all or any of the matters referred to in section 284 or section 287 or section
289;
(ii) alteration of share capital and variation in the rights and obligations of
shareholders or any class of shareholders;
(iii) alteration of loan structure, debt rescheduling or conversion into shares carrying
special rights or other relief and modification in the terms and conditions in respect of
outstanding debts and liabilities of the company or any part of such loan, debts or
liabilities or variation in the rights of the creditors or any class of them including any
security pertaining thereto;
(vi) acquisition or transfer of shares of persons who are or have been sponsors or
otherwise managing the affairs of the company on the specified terms and conditions;
(v) issue of further capital including shares carrying special rights and obligations
relating to voting powers, dividend, redemption or treatment on winding up;
(vi) removal and appointment of directors (including the chief executive) or other
officers of the company;
(vii) amendment, modification or cancellation of any existing contract; or
(viii) alteration of the memorandum or articles or changes in the accounting policy and
procedure.
(4) The rehabilitation plan shall be submitted for approval to the Federal Government
which shall, unless it otherwise decides for reasons to be recorded, cause it to be
published in the official Gazette for ascertaining the views of the shareholders creditors
and other persons concerned within a specified period.
(5) Before approving the rehabilitation plan, the Federal Government shall take into
consideration the views relating thereto received from any quarter within the specified
period.
(6) On the approval of the rehabilitation plan by the Federal Government, its provisions,
with such modification as may be directed by the Federal Government, shall become final
and take effect and be implemented and shall be valid, binding and enforceable in all
respects notwithstanding anything in this Ordinance or any other law or the memorandum or
articles of the company or in any agreement or document executed by it or in any
resolution passed by the company in general meeting or by its directors, whether the same
be registered, adopted, executed or passed, as the case may be, before or after the
commencement of this Ordinance.
(7) Any provision contained in the memorandum, articles, agreements, documents or
resolutions as aforesaid shall, to the extent to which it is repugnant to the provisions
of this Ordinance or the rehabilitation plan, become void.
(8) No compensation or damages shall be payable to any one for any matter or arrangement
provided for in, or action taken in pursuance of, the rehabilitation plan.
(9) The Federal Government may vary or rescind rehabilitation plan from time to time and
issue such directions as to its implementation and matters ancillary thereto as it may
deem expedient.
(10) The Federal Government or any authority or other person authorised by the Federal
Government in this behalf shall supervise the implementation of the rehabilitation plan
and may issue such directions to the parties concerned as may be deemed necessary by such
Government, authority or person, as the case may be.
(11) Whosoever fails to give effect to, carry out or implement the rehabilitation plan or
any matter provided for therein or any direction issued under subsection (10), shall be
liable to imprisonment of either description for a term which may extend to two years and
fine not exceeding one million rupees and, in case of a continuing failure, to a further
fine not exceeding five thousand rupees for every day after the first during which the
failure or default continues.
(12) Until a rehabilitation plan has been approved by the Federal Government and is in
operation, the provisions of this section shall not prejudice or affect the power or
rights of a company or its shareholders or creditors to enter into, arrive at or make any
compromise, arrangement or settlement in any manner authorised by this Ordinance or any
other law for the time being in force.
(13) The rehabilitation plan approved by the Federal Government and any modification
thereof shall, unless otherwise directed by it, be published in the official Gazette and a
copy thereof shall be forwarded by the Federal Government to the registrar who Shall
register and keep the same with the documents of the company.
(14) The Federal Government may, by notification in the official Gazette make rules to
carry out the purposes of this section.
Ref S.R.O 778 (I)/99 dated 24th June, 1999
