SECP turns down incorporation request of Cargill Holdings

Entity with similar name already operating; HEC sell-off not under threat.

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has rejected an application of Cargill Holdings Limited – the buyer of state-owned Heavy Electrical Complex (HEC) – for incorporation as a company with the name Cargill International.

The equity and corporate sector watchdog turned down the request after finding that another company with the name Cargill Pakistan Holdings Limited was already operating in Pakistan.

The move would not have any adverse impact on the government’s first strategic sale of a state-run company late last month, said independent legal experts and the Privatisation Commission (PC).

However, the SECP’s decision has strengthened the case of Cargill Pakistan Holdings, which is a subsidiary of US-based Cargill Group.

“Recently, an attempt was made to incorporate a company by the name of Cargill International (SMC-Private) Limited, but this application was rejected by the Company Registration Office (CRO), Karachi,” said the SECP in response to a query.

The SECP has directed all its field offices not to register any company with the name Cargill.

It said two companies – Cargill Pakistan Holdings and Cargill Pakistan Agri Foods – were already registered with the CRO Karachi. These companies are wholly owned subsidiaries of Cargill Group of the US.

Cargill Pakistan Holdings, incorporated in Pakistan on January 25, 1990, has also written a letter to the SECP, defending its registered name. The company’s paid-up capital is Rs1.16 billion and has a turnover of over Rs217.4 million.

The US-based Cargill has huge business stakes in Pakistan and is dealing in animal feed, agriculture commodities, cotton, grain and oilseeds, metals, palm and sugar. Its subsidiary Cargill Pakistan Agri Foods has a paid-up capital of Rs250 million and annual turnover of Rs2.7 billion.

Cargill Pakistan Holdings has served a legal notice on Cargill Holdings Limited for what it says illegally using its ‘Cargill’ trademark in HEC acquisition. This has again brought the privatisation of HEC – which manufactures power transformers – into limelight.

In the last week of March, the government approved the sale of HEC to Cargill Holdings Limited for just Rs250 million in cash. HEC is spread over 62 acres of land and many including three members of the PC board had opposed the sale.

According to documents that Cargill Holdings submitted to the PC, the company was registered in Kenya on December 10, 2014 – just a day after the PC decided to re-advertise for HEC privatisation.

Syed Sabur Rehman, who oversaw the acquisition process, was born in Lahore and was a British national, according to the company documents.

Cargill Holdings claims it is a division of Cargill Progressive Group of the UK. However, it is difficult to find out traces of the group on the website www.cargillprogressivegroup.com that the company mentioned in the documents.

The government has issued a letter of acceptance to Cargill Holdings and has given 45 days for execution of the deal. The letter gives the buyer the right to place its two officials in HEC for monitoring.

A company official claimed that the sale-purchase agreement had been signed with the PC, but the commission officials dismissed the claim.

Official version

“The SECP’s rejection of Cargill Holdings’ request will not affect the HEC deal,” remarked Mohammad Zubair, the PC Chairman.

He said Cargill Holdings was based in Kenya and under Pakistani laws a foreign company could acquire a Pakistani company. The SECP’s objections would be addressed very soon, he added.

Company’s view

A company official acknowledged that the SECP had turned down Cargill Holdings’ request for incorporation, but insisted it would not have any effect on the company’s operations.

The official said the company would not change its name despite objections by the SECP and the US-based Cargill.

Published in The Express Tribune, April 22^nd,  2015.

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