SECP Says No To Acting KSE MD

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In a number of letters available with Daily Times written to Board of Directors of KSE, SECP expressed serious reservations over the numerous steps taken by KSE board of directors (BoD) particularly the member directors, which according to SECP is acting in contravention of law and regulations.

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About the appointment of Haroon Askari as acting MD KSE, apex regulator directed BoD to refrain Askari from functioning or exercising any powers of MD including that of a director on the KSE board. SECP sought the explanation from the board why the prior approval was not taken before appointing him to act as the MD.

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SECP stated that the Articles of Association of KSE only allow the KSE board to delegate or entrust to General Manager the function and powers of MD in his absence. “MD is by virtue of his office is also a director on the board. Hence the KSE board cannot appoint a person to act as MD with full powers and function of MD without the prior approval of SECP”, the apex regulator of the capital market asserted in its communiqué to the exchange.

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Since the said approval, SECP added, was neither granted nor sought for the appointment of Haroon Askari as acting MD, the said appointment is in violation of the 2005 regulations and hence not valid.

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Also expressing concerns over the board meeting that gave approval to the appointment of acting MD KSE, SECP sought details from the KSE as why the meeting was held on a day when all the non-member directors were called by the Chairman SECP for a meeting in Islamabad and it was only participated by the member directors.

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“The non-availability of the meeting was also indicated in an email dated October 31, 2010 by Chairman KSE board. Accordingly, the said board meeting should have been postponed for a day or two taking into consideration the significance of the meeting being deliberated upon”, SECP mentioned.

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SECP also showed its concerns over the EOGM scheduled for November 04, 2010 and said that notice of EOGM sent to SECP does not set out material facts concerning the special business to be transacted at the proposed EOGM.

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SECP also disclosed that it received a letter dated November 01, 2010 signed by twenty one members of KSE addressing KSE BoD requesting for deferment of EOGM. The said EOGM was apparently called by the KSE BoD earlier on the requisition of certain members of KSE for passing a resolution to amend the Articles of Association of KSE.

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Referring to Annual General Meeting (AGM) held on October 28, 2010, SECP said that the issues brought to its knowledge by non-member directors exhibit seriously dishonourable and disgraceful conduct on the part of KSE members to non-member directors on the board. “This rude and disgraceful conduct of the members of the KSE compelled the non-member directors to approach SECP”, it stated and regretted that such hostile and unruly behaviour by members of exchange towards professional and independent directors is not acceptable.

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SECP sought a written apology from the relevant KSE members to the non-members directors and stated that misbehaving with members is punishable under General Regulations of KSE and therefore would not be tolerated in future.