The TRG Pakistan Judgement: Corporate Governance, Shareholder Rights, And The Maturing Of Pakistan’s Company Law Jurisprudence

Introduction

Few corporate disputes in recent Pakistani legal history have generated the level of judicial scrutiny, multi-jurisdictional complexity, and commercial significance as the litigation surrounding The Resource Group Pakistan Limited (“TRG Pakistan” or “TRGP”). What began as an internal boardroom struggle over the control of one of Pakistan’s most globally integrated technology firms has, through its passage across the Sindh High Court and ultimately the Supreme Court of Pakistan, produced a body of judicial reasoning that speaks directly to the integrity of Pakistan’s corporate governance framework, the robustness of minority shareholder protections, and the willingness of Pakistani courts to hold even sophisticated, offshore-structured transactions to the standards of domestic company law.

The Supreme Court’s short order of May 12, 2026 — authored by Justice Miangul Hassan Aurangzeb and announced before a three-member bench also comprising Justice Naeem Akhtar Afghan and Justice Muhammad Shafi Siddiqui — dismissed the appeals filed by Greentree Holdings Limited (“GTH”), The Resource Group International Limited (“TRGI”), and TRG Pakistan itself against the Sindh High Court’s landmark judgment of June 20, 2025. The dismissal, with costs awarded jointly and severally against the appellants, brought to a decisive judicial close a dispute that had wound its way through civil courts in Islamabad and Lahore, the Islamabad High Court, the Lahore High Court, the Sindh High Court, and ultimately the apex court of Pakistan. For practitioners of corporate and capital markets law in Pakistan, this judgement warrants careful study.

Background: The Dispute in Brief

TRG Pakistan Limited is a PSX-listed private equity and technology holding company. Its principal asset is a non-controlling interest representing approximately 45% of the voting power in TRG International Limited (“TRGI”), a global technology holding company with portfolio interests including a Nasdaq-listed customer management firm, IBEX, and an artificial intelligence company, Afiniti. The international scope and commercial scale of TRG’s operations meant that developments in Pakistan’s courts were watched closely in financial centres far beyond Karachi.

The dispute traces its origins to the resignation in 2021 of Muhammad Ziaullah Khan Chishti, the founder and long-serving CEO of TRG, following disclosures before the United States Congress of an arbitral award against him relating to sexual misconduct allegations. Following Chishti’s departure, the existing board of TRGP — led by Chairman Mohammed Khaishgi and CEO Hasnain Aslam — moved to consolidate their control over the company. Central to this consolidation was the role of Greentree Holdings Limited, a Bermuda-incorporated entity that, between 2021 and 2025, acquired approximately 30% of TRGP’s listed shares on the Pakistan Stock Exchange. Greentree further proposed a public tender offer at Rs. 75 per share for an additional 35% stake, which, if completed, would have accorded it outright majority control of TRGP.

Chishti, as a founding shareholder with a substantial stake, challenged both the historical acquisitions and the proposed tender, filing a petition under the Companies Act, 2017 before the Company Bench of the Sindh High Court. The central legal thesis of the petition was that Greentree’s acquisitions had been funded using TRGP’s own money — constituting unlawful financial assistance under Section 86(2) of the Companies Act — and that the entire scheme amounted to an act of oppression against him as a member under Section 286 of the Act.

The Legal Issues: A Detailed Analysis

1. Financial Assistance for Acquisition of Own Shares — Section 86(2) of the Companies Act, 2017

Perhaps the most consequential statutory question before the Sindh High Court was whether TRGP had provided “financial assistance” to Greentree for the purpose of acquiring shares in TRGP itself, in contravention of Section 86(2) of the Companies Act, 2017. Section 86(2) prohibits a company from providing financial assistance — whether directly or indirectly, whether by way of loan, guarantee, the provision of security or otherwise — for the purpose of, or in connection with, a purchase made or to be made by any person of shares in the company.

This provision has its roots in Section 54 of the Companies Ordinance, 1984 and mirrors comparable provisions in English company law, particularly the erstwhile Section 151 of the Companies Act 1985 (UK), which Pakistan’s courts have historically treated as persuasive authority. The 2017 Act retained and strengthened this prohibition, reflecting the legislature’s recognition that a company funding the acquisition of its own shares is inimical to the interests of the company, its minority shareholders, and its creditors alike.

The SHC’s 52-page judgment in JCM No. 12 of 2025 found that TRGP’s own funds — routed through its offshore affiliate TRGI and then through Greentree — had been deployed to purchase approximately 30% of TRGP’s outstanding shares. The court’s finding that this constituted financial assistance prohibited under Section 86(2) was, from a doctrinal standpoint, a careful application of the substance-over-form principle: the corporate and geographic distance introduced by routing transactions through Bermuda-incorporated entities did not, in the court’s analysis, insulate the transactions from the scrutiny of Pakistani company law. The SHC further found that the further proposed acquisition via the public tender offer — had it been permitted to proceed — would have used approximately USD 70 million of TRGP’s funds to grant Greentree majority control.

The consequences flowing from the Section 86(2) violation were significant. The court treated the disputed shares held by Greentree as treasury shares of TRGP — effectively reclassifying a 30% shareholding that had cost approximately USD 80 million as the property of the company itself. This is one of the most commercially impactful applications of the financial assistance prohibition in Pakistani corporate law jurisprudence to date.

2. Oppression and Mismanagement — Sections 284–292 of the Companies Act, 2017

The petition was brought under Section 286 of the Companies Act, 2017, which empowers any member or members holding not less than 10% of the share capital of a company to petition the Court where the affairs of the company are being conducted in an unlawful or fraudulent manner, or in a manner oppressive to any member or members, or in a manner not in accordance with the objects or memorandum of the company. Section 286 substantially reproduces — with modifications appropriate to Pakistani commercial conditions — the English law provision on unfair prejudice relief, historically rooted in Section 459 of the Companies Act 1985 (UK) and now found in Section 994 of the Companies Act 2006 (UK).

Pakistan’s courts have historically approached Section 286 petitions with considerable caution. The threshold for establishing oppression has, in the reported decisions of the High Courts, been treated as a demanding one: petitioners must demonstrate not merely disagreement with management decisions but conduct that is burdensome, harsh, and wrongful — a formulation drawn from Scottish Co-operative Wholesale Society Ltd v. Meyer [1959] AC 324, a House of Lords authority that Pakistani courts have repeatedly cited. The reduction of the locus standi threshold from 20% to 10% under the 2017 Act was a legislative acknowledgment that this remedy had historically been too difficult to access; yet, as commentators have noted, the judicial approach to its substantive threshold remained conservative.

The TRG judgement marks a significant departure from this conservative tradition. The SHC found that the board’s conduct — secretly establishing and funding an offshore vehicle to acquire control shares, withholding board elections that had been overdue since January 2025, and proceeding with a further public tender offer designed to entrench control — satisfied the threshold of unlawful, fraudulent, and oppressive conduct under Section 286. The court’s willingness to characterise the coordinated actions of a professional board, assisted by institutional co-investors, as oppressive under the Companies Act represents a meaningful strengthening of minority shareholder protection in Pakistan.

The court’s orders flowed accordingly: cancellation of the Greentree public tender, reclassification of Greentree’s shares as treasury shares, and an immediate direction to the board to convene an extraordinary general meeting for the election of directors.

3. Jurisdiction: The Interplay Between the Companies Act and the Securities Act, 2015

A preliminary jurisdictional challenge pressed by the respondents before the SHC was that the remedy of Section 286 of the Companies Act was not available in respect of a public offer governed by the Securities Act, 2015 and the Takeover Regulations thereunder. The argument, in essence, was that the statutory regime applicable to public offers under Part IX of the Securities Act constituted a complete, self-contained code that displaced the general shareholder remedies of the Companies Act.

The SHC rejected this contention, holding that the Securities Act and the Companies Act are complementing statutes rather than competing ones, and that a legislative intent to exclude the Section 286 remedy would have needed to be expressed with considerably greater specificity. This ruling has significant implications beyond TRG: it confirms that shareholders in listed companies who are subjected to oppression in the context of a public offer or takeover bid retain access to the Companies Act’s remedial provisions, and may not be confined to the SECP’s regulatory enforcement processes, which do not provide the same range of curative judicial relief.

This aspect of the judgement is doctrinally important because it addresses a lacuna that had existed in practice: sophisticated market participants had at times argued — as the respondents did here — that the presence of a regulatory framework under the SECP supervision precluded parallel judicial intervention under the Companies Act. The SHC’s reasoning forecloses that argument, and its endorsement by the Supreme Court on appeal gives it the standing of settled law.

4. Arbitration and the Limits of the Doctrine of Election

Another jurisdictional objection raised before the SHC related to the doctrine of election: since aspects of the dispute between Chishti and TRGI were the subject of arbitral proceedings in the United States — proceedings in which TRGI ultimately prevailed and obtained an award of USD 9.1 million against Chishti — it was argued that the petitioner had elected his remedy and could not maintain parallel proceedings before the Pakistani courts.

The SHC rejected this argument with equal firmness, holding that the remedy of Section 286 against oppression and mismanagement was not available before an arbitral tribunal and therefore the doctrine of election was not attracted. The court also addressed the related issue of res judicata, noting that the US arbitral award had determined no part of the petitioner’s counter-claim relevant to the Pakistani proceedings.

This aspect of the judgement is particularly significant for practitioners advising on multi-jurisdictional corporate disputes. The increasing practice of inserting broad arbitration clauses in shareholders’ agreements and related investment documents had created uncertainty about whether arbitral proceedings — particularly those seated offshore — could displace the jurisdiction of Pakistani courts over statutory shareholder rights. The TRG judgement offers a clear answer: statutory remedies under the Companies Act, and in particular the Section 286 oppression remedy, belong to the exclusive jurisdiction of the Court and cannot be contracted away or displaced through arbitral proceedings, regardless of the seat.

5. The Supreme Court’s Endorsement and Costs

The Supreme Court’s dismissal of the three appeals — filed by GTH, TRGI, and TRGP itself — represents a full appellate endorsement of the SHC’s analysis and orders. The Supreme Court’s decision to award costs jointly and severally against the appellants is itself a meaningful signal: cost orders in commercial litigation in Pakistan have historically been modest, and their deployment in this context reflects the court’s view of the conduct of the appeals. The bench noted that judgment had been reserved on February 3, 2026, and that only a short order would be issued at this stage, with detailed reasons to follow. The anticipated detailed judgment is expected to further enrich Pakistan’s company law jurisprudence.

Broader Legal and Doctrinal Significance

The TRG judgement, read as a whole, advances Pakistani company law jurisprudence in several important directions.

First, it confirms that the prohibition on financial assistance under Section 86(2) of the Companies Act, 2017 carries real teeth, and that courts will pierce through multi-layered offshore structures to apply it where the substance of a transaction so requires. This is consistent with the general trend in Pakistani judicial decision-making towards purposive statutory interpretation in commercial matters.

Second, it strengthens the Section 286 oppression remedy in a way that makes it genuinely available to shareholders in contested control situations — including, importantly, situations involving listed companies subject to the Securities Act regime. The judgement effectively closes what had been argued as a jurisdictional gap in shareholder protection for PSX-listed entities.

Third, it draws a clear and principled boundary between the domain of international commercial arbitration and the domain of statutory shareholder rights enforceable before the Company Bench. This boundary is important for investment structuring and dispute resolution planning.

Fourth, the conduct of the proceedings — multi-jurisdictional, technically complex, involving Bermuda court orders, US Federal District Court anti-suit injunctions, IRS tax liens, and a Nasdaq-listed subsidiary — demonstrates that Pakistani courts are capable of managing and adjudicating corporate disputes of the highest commercial complexity without losing sight of the domestic statutory framework.

A Positive Development for Pakistan’s Legal Reputation

It is appropriate to close with a broader observation. Pakistan’s courts have, over the past decade, made considerable progress in developing a commercial jurisprudence that meets the expectations of sophisticated domestic and international market participants. The TRG judgement is, on this measure, a milestone.

International investors and their counsel, when assessing the viability of investing in Pakistan-listed or Pakistan-domiciled entities, must satisfy themselves that minority shareholder rights are not illusory — that the statutory protections which appear on the face of the Companies Act will be enforced when tested by real-world conduct. The TRG judgement provides that assurance in a case that was, by any measure, a real-world stress test. A coordinated scheme involving offshore entities, institutional co-investors, and professional management was examined, found wanting, and judicially undone.

The willingness of Pakistan’s Company Bench and, on appeal, the Supreme Court to engage with complex offshore structuring, to apply domestic company law to transactions routed through Bermuda, and to do so with clarity and evident command of the legal issues, sends a message that is well worth hearing in London, New York, Hong Kong, and the Gulf: Pakistan’s courts, when dealing with commercial company law matters of genuine complexity, are capable of delivering principled, reasoned, and commercially informed justice.

For lawyers advising foreign clients on investment into Pakistan — whether through the PSX, through private equity structures, or through direct investment in operating entities — the TRG judgement is a development to cite with confidence. It stands as evidence that Pakistan’s legal system possesses the institutional capacity and the doctrinal sophistication to protect legitimate investment, to sanction abuse of corporate power, and to do so through a judicial process that operates at the standard expected of serious commercial jurisdictions.

Pakistan’s jurisprudence does not need apology in this area. The TRG judgement is proof of that.

This article is intended for general informational purposes and does not constitute legal advice. Readers with specific legal questions are encouraged to consult qualified legal counsel. The detailed reasons of the Supreme Court’s judgment are awaited and may further refine the legal analysis set out above.

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