ISLAMBAD : The Appellate Bench of the Securities and Exchange Commission of Pakistan (the SECP) has dismissed three appeals filed by Security Papers Limited (SPL), National Investment Trust Limited (NITL) and Punjab Provincial Cooperative Bank Limited (PPCBL) against the order dated January 26, 2024 passed by the Director, Adjudication Division, SECP. The Order was passed against SPL wherein it was held that SPL is a Public Sector Company (PSC) because of its shareholding structure and government control, therefore, the SPL was directed to comply with the requirements of Section 2(54) of the Companies Act, 2017 and the Public Sector Companies (Corporate Governance) Rules, 2013 (the PSC Rules).
SPL had challenged the Order on the grounds that being a public listed company it is not required to meet the legal and statutory requirements applicable to the public sector companies. NITL and PPCBL also filed appeals before the Appellate Bench, primarily, on the ground that NITL and PPCBL are neither owned nor controlled by the Federal or Provincial governments, therefore, shareholding of both entities in SPL cannot be considered as government holdings to declare SPL as a PSC.
The shareholding structure of the SPL reflects that it is a PSC as the majority shareholding is owned by the entities that are controlled or owned by the Federal Government/Provincial Government. As a public listed PSC, the SPL is not only required to meet the listing companies’ requirements but it is also under the obligation to comply with all requirements applicable to PSCs.
In terms of entities with shareholding in SPL, the Bench noted that NITL’s MD is a nominee of the Federal Government. Furthermore, PRCL’s 79% shareholding is vested with the Federal Government and its entities and it is under the administrative control of the Federal Ministry of Commerce. 94.65% stake in PPCBL is held by the Government of Punjab through the Provincial Finance Department and SLIC is a state-owned and controlled company, and the appointment of SLIC’s incumbent chairman was made by the Federal Government on August 17, 2023. The Bench has further noted that PSPCL is a wholly owned subsidiary of the State Bank of Pakistan and the position of its chairman and deputy chairman are designated to the Governor and one of the Deputy Governors of the State Bank of Pakistan, appointed by the President of Pakistan (on recommendation from the Federal Government), therefore, it establishes that PSPCL is controlled by the Federal Government.
Based on the above, the Bench held that PSPCL, SLIC, NITL, PPCBL, and PRCL fall within the term “agency of the Government or statutory body” and the shareholding of the aforementioned entities in SPL establishes that it is a PSC. In view thereof, the Bench dismissed the appeals filed by SPL, NITL and PPCBL.