Lahore: M/S. Saffron Pharmaceuticals (Private) Limited, a Faisalabad-based company, narrowly avoided a financial penalty following a breach of the Companies Act, 2017, regarding the timely filing of audited financial statements. The order was announced on March 04, 2024, by the Adjudication Officer of the Adjudication Department-II in Lahore.
The case against Saffron Pharmaceuticals was initiated after the company failed to file its audited financial statements for the year 2023 with the Registrar within the stipulated timeline, as mandated by Section 233 of the Companies Act, 2017. This lapse led to the issuance of a Show Cause Notice (SCN) on February 07, 2024, requiring the company to explain why penal action should not be taken against them.
Despite multiple opportunities for hearings on February 19 and March 4, 2024, the company and its directors failed to appear personally or through an authorized representative. It was only on February 29, 2024, that Mr. Usman Ali Khan, representing the company, appeared via Zoom from the Company Registration Office (CRO) in Faisalabad to argue the case.
Mr. Khan asserted that the delay in filing was due to the restructuring of the finance and accounts department, which inadvertently caused the oversight. He further informed the adjudicating authority of the delayed filing of the financial statements during the proceedings. The Registrar, CRO, Faisalabad, confirmed this delay.
According to information available from the Pakistan Stock Exchange (PSX), the breach was considered serious due to its deliberate nature and highlighted systemic weaknesses in the company’s management and internal control systems. As per Section 233 of the Companies Act, 2017, the company was liable for a level-1 penalty on the standard scale.
However, during the adjudication proceedings, Saffron Pharmaceuticals complied with the mandatory requirements of Section 233, which was verified by the Registrar, Faisalabad. Consequently, the Adjudication Officer decided to condone the penalty and issued a warning to the company for future compliance with the law.
In conclusion, the officer emphasized the importance of timely financial reporting and the directors' duty of care in making business decisions. The warning serves as a reminder of the company's obligation to adhere to legal requirements in the future, ensuring transparency and reliability in its financial disclosures.