Section 291 — Management by Administrator

(1) If at any time a creditor or
creditors having interest equivalent in amount not less than sixty percent of the paid
up capital of a company, represents or represent to the Commission that—

(a) the affairs or business of the company are or is being or have or has
been conducted or managed in a manner likely to be prejudicial to
the interest of the company, its members or creditors, or any director
of the company or person concerned with the management of the
company is or has been guilty of breach of trust, mis-feasance or
other misconduct towards the company or towards any of its
members or creditors or director;

(b) the affairs or business of the company are or is being or have or has
been conducted or managed with intent to defraud its members or
creditors or any other person or for a fraudulent or unlawful purpose,
or in a manner oppressive of any of such persons or for purposes as
aforesaid; or

(c) the affairs of the company have been so conducted or managed as to
deprive the members thereof of a reasonable return; or

(d) any industrial project or unit to be set up or belonging to the
company has not been completed or has not commenced operations
or has not been operating smoothly or its production or performance
has so deteriorated that–

(i) the market value of its shares as quoted on the securities
exchange or the net worth of its share has fallen by more than
seventy-five per cent of its par value; or

(ii) debt equity ratio has deteriorated beyond 9:1; or

(iii) current ratio has deteriorated beyond 5:1; or

(e) any industrial unit owned by the company is not in operation for
over a period of two years or has been in operation intermittently or
partially during the preceding two years; or

(f) the accumulated losses of the company exceed sixty percent of its
paid up capital,

and request the Commission to take action under this section, the Commission may,
after giving the company an opportunity of being heard, without prejudice to any
other action that may be taken under this Act or any other law, by order in writing,
appoint an Administrator, hereinafter referred to as the Administrator within sixty
days of the date of receipt of the representation, from a panel maintained by it on
the recommendation of the State Bank of Pakistan to manage the affairs of the
company subject to such terms and conditions as may be specified in the order:

Provided that the Commission may, if it considers it necessary so to do, for
reasons to be recorded, or on the application of the creditors on whose
representation it proposes to appoint the Administrator, and after giving a notice to
the State Bank of Pakistan, appoint a person whose name does not appear on the
panel maintained for the purpose to be the Administrator.
Explanation.—For the purposes of clause(c), the members shall be deemed
to have been deprived of a reasonable return if, having regard to enterprises
similarly placed, the company is unable to, or does not, declare any or adequate
dividend for a period of three consecutive years.
(2) The Administrator shall receive such remuneration as the
Commission may determine.
(3) On and from the date of appointment of the Administrator, the
management of the affairs of the company shall vest in him, and he shall exercise
all the powers of the board or other persons in whom the management vested and
all such directors and persons shall stand divested of that management and powers
and shall cease to function or hold office.

(4) Where it appears to the Administrator that any pur chase or sales
agency contract has been entered into, or any employment given, patently to benefit
any director or other person in whom the management vested or his nominees and
to the detriment of the interest of the general members, the Administrator may, with
the previous approval in writing of the Commission, terminate such contract or
employment.
(5) No person shall be entitled to, or be paid, any compensation or
damages for termination of any office, contract or employment under sub -section
(3) or sub-section (4).
(6) If at any time it appears to the Commission that the purpose of the
order appointing the Administrator has been fulfilled, it may permit the company
to appoint directors and, on the appointment of directors, the Administrator shall
cease to hold office.
(7) Save as provided in sub -section (8), no suit, prosecution or other
legal proceeding shall lie against the Administrator for anything which is in good
faith done or intended to be done by him in pursuance of this section or of any rules
or regulations made thereunder.
(8) Any person aggrieved by an order of the Commission under sub -
section (1) or sub-section (10), or of the Administrator under sub -section (4) may,
within sixty days from the date of the order, appeal against such o rder to the
concerned Minister-in-Charge of the Federal Government.
(9) If any person fails to deliver to the Administrator any property,
records or documents relating to the company or does not furnish any information
required by him or in any way obstr ucts the Administrator in the management, of
the affairs of the company or acts for or represents the company in any way, the
Commission may by order in writing, direct that such person shall be liable to a
penalty of level 3 on the standard scale.
(10) The Commission may issue such directions to the Administrator as
to his powers and duties as it deems desirable in the circumstances of the case, and
the Administrator may apply to the Commission at any time for instructions as to
the manner in which he shall conduct the management of the company or in relation
to any matter arising in the course of such management.
(11) Any order or decision or direction of the Commission made in
pursuance of this section shall be final and shall not be called in question in any
Court.
(12) The Commission may, make regulations to carry out the purposes
of this section.
(13) The provisions of this section shall have effect notwithstanding
anything contained in any other provision of this Act or any other law or contract,
or in the memorandum or articles of a company.