dominion stock fund

8/3/2019 Dominion Stock Fund

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Facts that lead to the order

y Registered in Oct 1994 as Investment Company under InvestmentCompanies and Investment Adviser Rules(1971)

y After Promulgation of Non-Banking Finance Companies Rules(2003),SECP started regulating investment companies

y

SECP had found the company to be prejudice to the interest ofshareholders and issued Show Cause Notice (SCN) against the companydated June 21, 2005

y SCN pointed out that company had failed to:y obtain registration under rule 38 of NBFC Rulesy Hold AGM for years 2003 & 2004 (section 158)

y Annual Accounts for year 2003 &2004 (Section 233)y Prepare and circulate quarterly accounts since 2003 (Section 245)

y Custodian


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y Financial Position of the company had been deteriorating

I. Paid Up capital 50 million

II. Accumulated losses Rs. 34.97 Million

III. Companys Equity Rs. 17.4 million which is way below the minimum requirement

(Rs. 100 Million)

y SCN dated June 21 2005 was disposed by order dated October 18 2006

passed by Director NBFCD which concluded the following points

a) Failure to appoint Investment Advisor (rule 39 NBFC rules) and a custodian (rule

40(1) NBFC Rules)

b) Failure to register Investment Company under rule 38 of NBFC Rulesc) Failure to hold AGM and circulate periodic accounts

i. No AGM and circulation o accounts for year 2003,2004,2005 and 2006 (Section 158, 233)

ii. No circulation of Quarterly accounts since 2003


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y Failure to meet minimum equity requirements

i. Companys Equity Rs. 17.4 million which is way below the minimum requirement(Rs. 100 Million)

ii. Present management took control of the company in 2003 but failed to redress thefinancial situation

iii. It tried to merge the company with Investec Mutual Funds but failed to do so due osuspension of brokerage functions of investec

y Financial Position

i. Accumulated losses Rs. 34.97 Million

ii. Net Asset Value per Certificate Rs. 1.96 which is far below the par value of Rs. 10

y Dividend Disribution

i. For Last five years the company had only distributed 2% dividend amounting Rs. 1Million

ii. Share Holders funds eroded by Rs. 32. 6 Million which is 65% of paid up capital


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y NBFC concluded that

i. Company affairs were not managed prudently

ii. Appointed Asim Shahid Rehman Chartered Accountants to investigate into

company affairs under Section 265 of the ordinance

iii. Objective of the investigation was to determine true and fair financial position of

the company

y Investigators could not investigate because the company had

challenged the order in Appellate Bench of the Commission on

November 07, 2006

y

On July 20, 2009 Appellate Bench allowed the investigations withsome modifications


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y Investigation concluded

i. Registered Office of the company was closed by FIA

ii. Main Sponsor of the company is in FIAs Custody

iii. Affairs of the company were severely mismanaged and financial position was as

such as to endanger its solvency


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y In view of above facts, SECP issued SCN on February 04, 2010 under

section 309

i. SCN was returned undelivered

ii. SCN was then Published in 2 English and 2 Urdu news papers on April 30 2010

iii. Fourteen days time to respond to SCN ending on MAY 14, 2010y Aforementioned time line had passed and there was no response from

the company or the persons responsible for its affairs.


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Decision

y Company had violated Rules 38,39 & 40(1) of NBFC rules, 2003 as well

as provisions ofmsection 158,233, and 245 of the ordinance

y Asif Jalal Bhatti, Executive director Specialized Companies Division

ordered Joint registrar to present a petition for winding up in Sindh

High Court

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