TANDLIANWALA SUGAR MILLS LIMITED vs SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss

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TANDLIANWALA SUGAR MILLS LIMITED VS SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss. 166 & 512---Listed Companies (Code of Corporate Governance) Regulations, 2019, Reglns. 6 & 37---Independent directors in a listed company, selection of---Mandatory requirement---Director Adjudication Securities and Exchange Commission penalized the appellant (a listed company) for its inability to have independent director(s)---Contention of the appellant (a listed company) was that the Companies Act, 2017, itself did not require having independent directors in a listed company---Validity---Subsection (1) of S.166 of the Companies Act, 2017 ('the Act 2017'), inter alia, recognizes the requirement of appointment of an independent director in a company under any law, rules, regulations or code, whereas subsection (3) of the S.166 of the Act, 2017 provides the manner of election of an independent director of a listed company---Subsection (5) of S.166 of the Act 2017 is an enabling provision whereby the Commission is empowered to specify the manner and procedure of selection of independent directors through regulations and Regln. 6 of Listed Companies (Code of Corporate Governance) Regulations, 2019 ('the Regulations') stipulates the same as mandatory; thus, in this context, said provisions makes it incumbent upon a listed company to elect independent directors---Use of words 'shall' (in S. 166(3) of the Act 2017) and 'mandatory' (in Regln. 6 of the Regulations) leaves no room for any ambiguity that the Legislative intent behind the said provision is to have independent directors of the Board of a listed company and the same is not directory in nature---Thus, the contention of the appellant /company was not tenable---Appellant was rightly penalized in terms of S. 512 of the Companies Act, 2017, read with Regln. 37 of the Listed Companies (Code of Corporate Governance) Regulations, 2019, on account of contravention of provisions of the Regulations, 2019---Appellate Bench maintained the impugned order passed by Director-Adjudication of the Commission---Appeal, filed by the listed company, was dismissed, in circumstances.

TANDLIANWALA SUGAR MILLS LIMITED vs SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss — 2024 CLD 740 SECURITIES-AND-EXCHANGE-COMMISSION-OF-PAKISTAN

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