EQUITY MASTER SECURITIES (PVT.) LIMITED vs PAKISTAN STOCK EXCHANGE LIMITED Ss

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EQUITY MASTER SECURITIES (PVT.) LIMITED VS PAKISTAN STOCK EXCHANGE LIMITED Ss.304(a) & 304(e)---Securities Act (III of 2015), Ss. 2(xix) & 148---Petition to wind up a broker company---Maintainability---Company moving the Court in concert with its contributories---Scope and effect---Objection qua maintainability of the petition was raised as the winding up petition was instituted, in concert with contributories, by a company licensed under S. 148 of the Securities Act, 2015, ('the Act 2015') issued by the Security and Exchange Commission of Pakistan / SECP (Petitioners / Company)---Validity---Petition has been incompetently instituted by the Company and its contributories without complying with the prerequisites embodied in S. 304 of the Companies Act, 2017, ('the Act, 2017') for the reason that the number of members of the Company are not reduced below two which is one of the threshold prescribed under S. 304(a) of the Act, 2017 for the contributories to maintain the petition for winding up---Petition is also not maintainable in terms of S. 304(e) of the Act, 2017 on behalf of the Company since it did not furnish, in the prescribed manner, the particulars of its assets, liabilities, business operations and the suits or proceedings pending against it---A mere hand written one page was appended with the petition which lists assets twice than the liabilities of the Company which is in complete contrast to the averments in the petition that the substratum of the Company has been lost and it is not a going concern---The information is not only deficient but is also not substantiated on the basis of reliable documents such as audited accounts of the Company---The information is also in deep contrast to the information provided by the regulators which demonstrates that pertinent facts and particulars as required to be disclosed under S.304(e) of the Act, 2017 were concealed in the petition with mala fide intention---Petition is also not maintainable on behalf of the Company---Winding up petition, being non-maintainable, was dismissed. Citation Name: 2025 CLD 1445 LAHORE-HIGH-COURT-LAHOREBookmark this Case EQUITY MASTER SECURITIES (PVT.) LIMITED VS PAKISTAN STOCK EXCHANGE LIMITED Ss. 2(xix), 138, 139, 148 & 174---Companies Act (XIX of 2017), Ss. 301, 305 & 308---Petition to wind up a broker company---Maintainability---Company moving the Court in concert with its contributories---Scope and effect---Objection qua maintainability of the petition was raised as winding up petition was instituted, in concert with contributories, by a company licensed under S. 148 of the Securities Act, 2015, ('the Act 2015') issued by the Security and Exchange Commission of Pakistan /SECP (Petitioners / Company)---Validity---Admittedly, the Company is not an ordinary Company but a licensed Company which is engaged in the further regulated business of selling, buying and dealing in securities on Pakistan Stock Exchange (PSE) under the license issued by SECP---As such, the operations of the Company are subject to regulatory regime of PSE as a frontline regulator and SECP as an apex regulator which regulates the PSE as well as the Company---Section 148 of the Act 2015, for regulation of the securities industries as well as the protection of investors, requires a licensed person not filing a petition for winding up unless it satisfies the SECP in the manner prescribed that it has settled all outstanding investors claims as per default regulations and has obtained prior approval of the SECP---Section 2(xix) of the Act 2015 defines 'Default Regulations' while Ss. 138 to 139 of the Act 2015 confer powers upon the SECP to inspect and investigate the affairs of a licensed person---In short, a comprehensive regulatory scheme is available to scrutinize the affairs of a licensed person for the protection of rights and interests of stakeholders and investors---Under S. 174 of the Act 2015, it is abundantly clear that provisions of the Securities Act, 2015, being a special law applicable to the Company, will pre-empt and take precedence to the provisions of winding up stipulated in the Companies Act, 2017 ('the Act 2017')---Record shows that SECP has invoked its investigative powers vested under S. 139 of the Act 2015 against the Company / petitioners and an investigation team has been constituted for said purpose and that the Company as a securities broker has defaulted against a host of its account holders and the victims are the public-at-large having as many as 197 unsettled claims against the Company and that the process of investigation is being delayed due to pendency of the present petition---Therefore, it is safely concluded that the Company has defaulted with respect to its liabilities towards the account holders and others---Default Regulations and investigation processes by PSE and SECP as regulators have already been triggered against the Company---Both the regulators have unequivocally opined that in the given circumstances, the winding up of the Company is not in public interest---Rather, the right to institute the winding up petition in terms of S. 148 of the Act 2015 under the given circumstances now vests with the SECP---As such, the institution of the present petition is clearly an attempt on the part of the petitioner to bypass the mandatory and special regulatory framework and evade their responsibilities and liabilities under the law---Hence, it is not just, equitable or in the public interest to wind up the Company particularly when other remedies are available to the petitioners and they are acting unreasonably in seeking winding up of the Company instead of availing and pursuing the other remedy as ordained in S. 308(2) of the Act, 2017---Therefore, the present petition instituted by the Company and its contributories is not maintainable, however, SECP as the apex regulator may file the winding up petition as and when in its opinion, it would be just and equitable to do so in terms of S. 148 of the Act, 2015 read with Ss. 304 & 305 of the Act, 2017---Winding up petition, being non-maintainable, was dismissed.

EQUITY MASTER SECURITIES (PVT.) LIMITED vs PAKISTAN STOCK EXCHANGE LIMITED Ss — 2025 CLD 1445 LAHORE-HIGH-COURT-LAHORE

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