Sindh High Court has announced its verdict in the KASB vs SBP case. The Court has disposed of the petitions, ordering the State Bank of Pakistan (SBP) to issue fresh notices to shareholders regarding the scheme of amalgamation, provide auditors’ report regarding the valuation of KASB Bank, and if needed, make the compensation payment.
The Sindh High Court has termed SBP’s role in the amalgamation episode as “breaches of statutory duty.”
The State Bank was not able to provide a reasonable amount of time to the KASB Bank to comply with mandatory requirements, as just two days were given to the bank to consult its members, depositors, and other shareholders, with regards to the amalgamation scheme.
The three constitutional petitions were filed by Nasir Ali Shah Bukhari, KASB Corporation Limited, and Muzaffar Ali Shah Bukhari versus the Federation of Pakistan, State Bank of Pakistan, SECP, A.F. Fergusons & Co., BankIslami, and Cybernaut Investments Group.
The Court termed SBP’s inability to comply with regulations as “near complete failure” and “woefully inadequate”.
The State bank of Pakistan has been ordered by the Sindh High Court to give notice to those persons who were members of the Bank inviting objections to the negative valuation of the Bank as set out in the scheme of amalgamation within 30 days of this judgment.
They have also been directed to make “reasonable efforts to locate the particulars of the persons aforesaid from the Stock Exchange, CDC and BankIslami.”
Furthermore, the SBP is also now required to disclose the auditors’ report with regards the valuation of KASB.
That said, the SBP has been put under no obligation to provide any other information in excess of the auditors’ report and has been granted the right to reject any such request for an additional record.
In case of valuation other than that in the auditors’ report, and is meaningful or substantive, the SBP shall include the modalities of payments to be made.
The full compensation is required to be paid within four months of the order, and SBP must ensure the same. On the “meaningfulness” of the compensation, the SBP has marked “payment equal to 10% or more of the par value of the Bank”s shares.”
The SHC has directed the SBP to specify a period of 15 days from the publication on its website, as the period within which the objections can be taken.