ISLAMABAD, Feb 20: In a bid to safeguard shareholders’ interests, the Securities and Exchange Commission of Pakistan (SECP) has suspended the chief executive officer and the board of directors of Natover Lease & Refinance Ltd (NLRL) after detecting mismanagement and misappropriation.

The SECP has also appointed Nasier A. Sheikh as administrator to manage the affairs of the company, which offers motor vehicles and industrial machinery on leasing.

The commission had initiated inspection against the company by exercising its powers under Section 282I of the Companies Ordinance, 1984.

During the course of the inspection, the SECP observed that the affairs of NLRL had “prima facie” been mismanaged and the funds of the company have been misappropriated.

The company was also found involved in violation of the prevailing regulatory framework.

On the basis of facts highlighted in the inspection report and in order to safeguard the interests of stakeholders, the SECP has started regulatory action against the NLRL, and in exercise of its powers under section 282E and 282F of the Ordinance, it has superseded the CEO and BoD of NLRL.

The newly-appointed administrator is a banker and has worked at various senior positions in leading financial institutions, within and outside the country. Lately, he served as chief executive officer of a well-reputed leasing company.

The SECP has suspended trading in the shares of NLRL on stock exchanges. The permission to take deposit from the general public and corporate clients has also been cancelled by the SECP.

As an apex regulatory authority, it is incumbent upon the SECP to take appropriate measures to protect the interests of depositors and stakeholders of a financial institution and this action is in line with this obligation.

Syed Zahid Hussain, a former senior civil servant, is the chairman of the company.

The suspended CEO of the NLRL, Nadeem Shaikh, had served in the UK and European markets before he moved back to Pakistan in 1980. The six suspended members of the board of directors of the company are: Hassan Ali Fadoo, Khalid Latif, Syed Dilawar Abbas, Brig (retd) Zareef Malik, Qamar S Awan and Shahid Anwar.

A look into the company’s cash flow as by the end of March 2006 shows that it has been in the red since 2005. Cash flow from investing activities were in the negative (Rs116.716 million).

The NLRL is listed on Karachi, Lahore and Islamabad stock exchanges and is classified as non-banking finance company.

On Dec 2, 2005, the closing price of NLRL ordinary share was quoted at Rs13.50 per share.

According to the company’s balance sheet, the NLRL increased its authorised capital from Rs400 million to Rs700 million divided into 10 million ordinary shares and 60 million preference shares of Rs10 each.

Subsequently to the year-end in August 2005, the company issued three million ordinary right shares of Rs10 each and 25m preference right shares of Rs10 each to the existing members. During 2004-05, the company issued 525,000 ordinary shares of Rs10 each as bonus shares to existing ordinary shareholders.

As on June 30, 2005, the largest number of NLRL ordinary shares were held by Natover International (Pvt) Ltd which worked out to 36.2pc of the company’s total 5.775 million ordinary shares.