Mon. Sep 23rd, 2019

Jazz Pakistan illegally transfers Rs 34b dividends, SECP orders recovery from shareholders

Aftab Ahmed

Islamabad: Pakistan’s top watchdog on Companies & Corporate affairs has slapped a fine of Rs 1.5 million to the country’s leading mobile operator for illegally gains from disposal and transfers of assets by violating Companies Act, 2017, it is learnt reliably.

The Securities and Exchange Commission of Pakistan (SECP) has penalized a fine of Rs 1.5 million to Pakistan’s leading Telcos—Pakistan Mobile Communications Limited ( Now Jazz Pakistan)– and his Chief Executive Officer (CEO), Aamir Ibrahim for illegally payment of dividends in the tune of Rs 34 billion to its shareholders, says a decision , seen by the newztodays.com.

The regulator has also directed to stop the payment of dividends immediately and to recover and deposit the amount of dividends from the shareholders and submit the compliance report to the Commission, it added.

The section 240(2) and section 241 read with section 502 of the Companies Act 2017 reads as, “The act prohibits the declaration or payment of dividend from the sale or disposal of immovable property or assets of a capital nature.”

The SECP on June 21, 2018 imposed a fine of Rs 0.5 million on Pakistan Mobile Communications Limited (Jazz Pakistan) and Rs one million to its CEO, Aamir Ibrahim but Jazz Pakistan challenged the impugned order of the SECP in the appellate bench comprising  Farrukh H Sabzwari, Commissioner, AML and Aamir Ali Khan, Chairman/Commissioner CLD-CSD.

The appellants—Pakistan Mobile Communications Limited and Aamir Ibrahim CEO, Pakistan Mobile Communications Limited filed appeal against the respondent—Mubasher Saeed Sadozai, Director/Head of Department (CCD), SECP.

The bench also reiterated that the applicant’s core business is provision of telecom services to its customers and it is important to understand that said services may not be rendered without availability of complete infrastructure that includes the telecom towers. It also rejected Pakistan Mobile Communications Limited’s plea that PMCL’s core business was buying and selling of telecom towers.

The appellate Bench III in its order said, “The violation of section 240(2) of the Act has been established against the Pakistan Mobile Communications Limited and its CEO and SECP’s direction/observation with the regard to alleged violations of section 279 to 282 for impugning the SECP order is upheld.” It also dismissed the appeal of the Pakistan Mobile Communications Limited.

The PMCL—Now Jazz Pakistan– had opening accumulated losses of Rs 3.056 billion in year 2017. The gain on sale of capital assets in 2017 was Rs 59.298 billion, which offset all the opening accumulated losses. After such set off, there was Rs 74.603 billion profit available with the Company and out of which only Rs 34.810 billion were declared as dividends.

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