2013 PLP 1736 (CLD)

UMAR ATA BANDIAL, J.

This petition challenges the letter dated 1-12-2010 issued by the SECP intimating the respondents Nos.5, 6 and 7 ("Acquirers") that the Listed Companies (Substantial Acquisition of Voting Shares and Takeover Ordinance, 2002 ("Takeovers Ordinance") does not apply to the transaction of shares by the Acquirers whereby their shareholding in a target company the respondent No.4 United Bank Ltd ("UBL") increased from 31.07 % to 51.07 %. This letter was conveyed to the Stock Exchanges in Pakistan by the UBL the target company on 29-12-2010. The petitioner is a minority shareholder of UBL who claims a right under section 6 of the Takeovers Ordinance obligating a shareholder with more than 25% listed voting shares in a listed company to announce its intention to purchase further shares up to 51% of the listed voting shares of such a target company in order that the minority shareholders of such company may offer their shares for sale and also receive benefit from the acquisition being made. The impugned letter dated 1-12-2010 by the SECP to the Acquirers is reproduced below:-- No. EMD/233/662/05 December 1, 2010. Mr. Zameer Choudrey Group Chief Executive Bestway(Holdings) Limited Abbey Road, London. Subject: Applicability of Listed Companies (Substantial Acquisition and Takeovers) Ordinance, 2002. Dear Sir, Please refer to your letter dated November 26, 2010 seeking clarification on the applicability of the above captioned Ordinance. It has been stated that the consortium of Bestway Group (BG) and Abu Dhabi Group (ADG) hold 61.87% shares in and control of United Bank Limited. A restructuring in tbe shareholding within the said consortium is proposed whereby the shareholding of the BG and ADG shall change, however the control of the Bank shall continue to rest with the aforesaid consortium. It is, therefore, viewed that the proposed acquisition of shares by BG from ADG shall not attract the provisions of section 6 of the Listed Companies (Substantial Acquisition and Takeovers) Ordinance, 2002. Amina Aziz Director (Enforcement)

2. At the outset the respondents Nos.1 and 2 SECP and the respondents Nos.5, 6 and 7, the Acquirers, have raised a preliminary objection that the SECP letter dated 1-12-2010 is appealable under section 33 of the Securities and Exchange Commission of Pakistan Act 1997 ("SECP Act") before an Appellate Bench of the SECP. Learned counsel for the parties were accordingly invited to address their submissions on the preliminary objection to maintainability of the petition. Based on the preliminary contentions advanced by the learned counsel for the parties, this Court vide order dated 27-12-2011 framed a number of questions touching the different facets of the preliminary objection for elaboration by the said learned counsel.

3. Detailed submissions were accordingly addressed by learned counsel for the parties to the controversy on the availability of an alternate remedy to the petitioner, namely, an appeal, against the aforenoted impugned SECP letter dated 1-12-2010. There is weight in the submission of the learned counsel for the petitioner that in order to decide valuable statutory rights of an affected party including a minority shareholder under the Takeovers Ordinance, it is necessary that an adverse order passed by the competent authority, presently the SECP must conform with the requirements of section 22(3) of the SECP Act. That provision is reproduced below for facility of reference:-- "The Commissioner shall, in adjudicating upon the rights of any person whose application on any matter it is required to consider in the exercise of any power or function under this Act, give the reasons for its decision after giving the person concerned a personal hearing, in addition to any written applications or submission which may be required to be made." (emphasis supplied).

4. On a plain reading, the impugned letter dated 1-12-2010 fails to satisfy the statutory requirement of providing reasons for the SECP decision that it conveys. To elaborate the alleged lack of reasoning, the learned counsel for the petitioner has referred to the petitioner's letter dated 5-1-2011 addressed to the Chairman SECP. It challenges the impugned letter dated 1-12-2010 for violation of section 6 of the Takeovers Ordinance for granting permission to the transfer of shares without public announcement of the Acquirers' offer for the acquisition of listed shares in UBL, the target company. To demonstrate the reasons given by the SECP to the petitioner learned counsel for the respondents has referred to the SECP letter dated 14-1-2011 answering the allegation made by the petitioner. That letter is reproduced below:-- EMD 233/662/205-683 THROUGH COURIER January 14, 2011 Mr. Asghar Abbas Gardezi, House No. 529, Block CC, Phase IV, DHA, Lahore. Subject: Bestway Group Acquisition of UBL Shareholding. Dear Sir, Please refer to your letter dated January 5, 2011, addressed to the Chairman, Securities and Exchange Commission of Pakistan ("Commission') requesting to check the process of acquisition of United Bank Limited's additional shares by Bestway Group. In this connection, please note that the Bestway Group (BG) and Abu Dhabi Group (ADG) jointly as consortium hold 61.37% share and control in UBL. Thus only restructuring of shareholding within the consortium does not attract the provisions of takeover Ordinance. Yours truly, M. Anwar Hashmi Deputy Director (Enforcement)

5. The main question addressed by the learned counsel for the parties is whether on the foregoing record of the case, an appeal against the impugned order is maintainable before the Appellate Bench of SECP. One of the grounds taken by the learned counsel for the petitioner is that the impugned order is defective for lacking the attributes of an order by the SECP as envisaged in section 22(3) of the SECP Act. Therefore the said letter cannot be described to convey an order but only an administrative decision against which no appeal lies. Consequently, no alternative remedy against the impugned letter is available and the present writ petition is therefore maintainable.

6. Learned counsel for the respondents have opposed the said contention on various grounds. He was asked to comment upon the alleged deficient ingredients of the impugned order, namely, lack of reasons, lack of hearing to the petitioner on his representation, and more particularly, the alleged incompetence of the author of the said order, namely, Director of the SECP who is subordinate in rank to a Commissioner who is the threshold officer specified in section 27 of the Takeovers Ordinance as being authorized to pass an order under the Ordinance. In response to the said query the learned counsel for the respondents without conceding the objections have expressed willingness that the impugned order be set aside and the matter be remanded to the SECP for passing a fresh order.

7. The respondents have taken a fair and candid position in the matter. By setting aside the impugned order the legal cover necessary for further transaction by the respondents in the sponsors' shares stands removed; hence it is in the interest of the respondents to co-operate for an expeditious decision being taken on the petitioner's objections by the SECP.

8. Accordingly, without going into further discussion on the strength and merits of the submissions made by the two sides the impugned letter/order dated 1-12-2010 is set aside. The matter is remanded back to the SECP for decision by the competent authority envisaged under the law on the objections raised by the petitioner. Such determination shall be made after hearing the affected parties for reasons to be recorded in writing in accordance with the statutory principle enshrined in section 22(3) of the SECP Act within three months. Pending a fresh order being made by the SECP the Acquirers' shares in UBL respondent No. 4 target company shall not be transacted or transferred by the respondents Nos.5, 6 and 7 Acquirers. Also pending fresh SECP decision status quo with respect to the title of shares of the management of the target company shall be maintained as of today.

9. Petition disposed of. KMZ/A-94/L Case remanded.