Pak Suzuki Motor Company Limited (PSMC) is facing a significant challenge as shareholders, representing over 15.39 percent of the company’s paid-up capital, have firmly rejected the proposed delisting. They have also issued a stern warning of legal action if their concerns are not addressed.

Shareholders are deeply concerned about alleged oppressive and unlawful management practices at PSMC in recent years. They argue that these practices have led to the diversion of substantial funds from the company. As a result, they are vehemently against the proposed delisting as a potential way for the management and holding company to escape accountability.

Concerns About Oppressive Management

A major point of contention is the perceived undervaluation of PSMC’s shares. Shareholders argue that the proposed delisting and the minimum purchase price determined by the Voluntary Delisting Committee (VDC) do not accurately reflect the company’s true value. They believe that the management is trying to take advantage of their alleged wrongdoing, which is negatively impacting minority shareholders.

Allegations of financial irregularities are adding fuel to the fire, with shareholders pointing to the use of transfer pricing, discounts, and various fees that have reportedly led to significant profit diversion to PSMC’s holding company. This has resulted in reported slender profit margins and abnormal losses, raising concerns about the company’s financial health.

Lack of Transparency in Reporting

Shareholders are highlighting a lack of transparency in financial reporting, noting that the adjusted earnings per share (EPS) crucial for a comprehensive understanding have not been provided despite repeated requests.

Shareholders have rejected the determined EPS of Rs. 46/share, considering it disproportionately low. They are also refusing to sell their shares at this price, citing the PSX Rule Book that mandates sponsors to hold at least 90 percent of total shares for delisting—an ownership threshold that cannot be met due to their collective rejection.

This shareholder backlash puts Pak Suzuki in a challenging position, as it not only faces the threat of delisting but also has to navigate the legal landscape shaped by disgruntled investors.

How the company addresses these concerns will undoubtedly have a lasting impact on its future and influence corporate governance practices in Pakistan.