NP WATERPROOF INDUSTRIES (PRIVATE) LTD. vs NP SPINNING MILLS LIMITED Ss

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NP WATERPROOF INDUSTRIES (PRIVATE) LTD. VS NP SPINNING MILLS LIMITED Ss. 78 & 286--- Transfer of shares to successor-in-interest---Procedure---Personal law, applicability of---Scope---Dispute was with regard to transfer of shares of company in favour of successors-in-interest of deceased share-holder---Objection raised by respondents was that minimum threshold of holdings and paid up capital of company was not matched by petitioners---Respondents further contended that neither Succession Certificate nor any lawful award was filed by petitioners in their favour---Validity---Case where an entity was created by a special law, it was to be dealt with within that frame of special law---No provision of special Act would take away any of their right under general law but it laid down a procedure of its own because the entity was creation of company law---Successor who intended to take advantage of any of its shareholding left by deceased had to go through a process prescribed by S. 78 of Companies Act, 2017 which had provided that shares or other securities of deceased member would be transferred on application duly supported by Succession Certificate or by lawful Award, as the case could be in favour of successors to the extent of their interest and their names were to be entered in Register of Companies---Officials of Securities and Exchange Commission of Pakistan (SECP) might not be aware of devolvement of shares amongst legal heirs and also as to who were the legal heirs to whom shares were devolved---Law had set a mechanism for transfer of shares, which was dependent on a Succession Certificate or lawful award by a Court of law---Majority shareholders' rights and their decision taken in such regard could not be ordinarily objected unless a significant number of shareholders, which was prescribed as 10% of the issued share capital of company, was achieved---If such minority shareholders were allowed to object and interfere in decisions of majority shareholders, business of the company would not function---Held, it was always wisdom of majority shareholders and insofar as decision of company was concerned, unless prerequisite of Ss. 78 & 286 of Companies Act 2017 were met, interference in the business affairs was not appropriate---Petitioners did not file a succession petition in respect of shares which were claimed after demise of their predecessor-in-interest---Suit for administration was pending which was filed by one of the respondents who claimed administration of moveable and immovable assets left by deceased shareholder---Requisite compliance was not made in terms of S. 78 of Companies Act, 2017---Proceedings for oppressive conduct by majority shareholders under S. 286 of Companies Act, 2017 were not maintainable--- Petition was dismissed, in circumstances.

NP WATERPROOF INDUSTRIES (PRIVATE) LTD. vs NP SPINNING MILLS LIMITED Ss — 2023 CLD 33 KARACHI-HIGH-COURT-SINDH

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