Hafiz MUHAMMAD AMIR HUSSAIN vs SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss — 2025 CLD 1323 ISLAMABAD

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Hafiz MUHAMMAD AMIR HUSSAIN VS SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss. 147, 158 & 159---Constitution of Pakistan, Art. 199---Election of directors of a public listed company, holding of---Term/tenure of directors, expiry of---Constitutional petition seeking direction against SECP to perform its statutory duty of conducting elections---Maintainability---Under the Constitutional jurisdiction the SECP can be directed to discharge its regulatory duties---Facts of the case, in brevity, were that the petitioner was a shareholder of the respondent company and he invoked the constitutional jurisdiction of the High Court under Art. 199 of the Constitution challenging the inaction of the Securities and Exchange Commission of Pakistan (SECP) in discharging its statutory duties under the Companies Act, 2017---It was contended that last election of directors was held on 14.01.2022, and as per Ss. 158 and 159 of the Companies Act, 2017 the next election was due by 15.01.2025,however, the respondent company failed to initiate the election process---Despite repeated approaches by the petitioner, SECP did not exercise its powers under Ss. 147 and 158 of the Companies Act, 2017 to ensure timely elections or to prevent retired directors from unlawfully continuing in office---Consequently, the petitioner sought High Court's intervention for enforcement of statutory obligations by SECP---The core issue for determination by the High Court was as to "whether the SECP was legally bound under the Companies Act, 2017 to ensure that elections of directors were conducted within the prescribed period, and whether its (SECP's) failure to take regulatory action against a respondent company for not holding timely elections amounted to a violation of its statutory duties, warranting the exercise of Constitutional jurisdiction by the High Court under Art. 199 of the Constitution?"---Held: The SECP despite having knowledge of the non-compliance of the respondent company failed to issue any direction or initiate action under Ss. 147, 158 and 159 of the Companies Act, 2017, thus, could not justify the failure to comply with the mandatory statutory requirement to hold elections within the prescribed statutory period after expiry of the terms of directions---The record and correspondence submitted by SECP reflected that SECP was well aware of the expiry of tenure of respondent company's directors, however, no action was initiated---The powers that flew out of S. 147 of the Companies Act 2017 were entirely different and it empowered SECP with not only the authority to direct the calling of meetings but also to call such meetings itself when there was a default in holding statutory, annual, or extraordinary general meetings which powers were independent of company articles and were legislated to ensure that a company could not paralyze its corporate governance compliance and infringe the rights of shareholders---Section 147 of the Act, 2017 provided an alternate solution to be applied only when the normal machinery of the company failed which was patently evident in the present case---The SECP being the regulator had not ensured compliance with the statutory provisions and the stance taken by the SECP that it was only empowered to direct the company to hold the meeting and not to call the meeting itself was misconceived---Securities and Exchange Commission of Pakistan was directed to invoke its powers under S. 147 and call EOGM of the respondent company to conduct elections in accordance with the relevant provisions of the Companies Act, 2017 and follow the procedure provided under S. 159 of the Companies Act, 2017---Constitutional petition was held to be maintainable since the petitioner merely sought enforcement of SECP's statutory duties and no relief was sought against the respondent company or the registrar concerned---Constitutional petition was disposed of, in circumstances.

Hafiz MUHAMMAD AMIR HUSSAIN vs SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss — 2025 CLD 1323 ISLAMABAD

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