The Securities and Exchange Commission of Pakistan (SECP), as part of its efforts to promote ease of doing business through meaningful stakeholder engagement, held an interactive virtual session with representatives of Overseas Investors Chambers of Commerce & Industry (OICCI).   The session was chaired by the Chairman SECP, Aamir Khan, who briefed the participants about recent improvements in the regulatory ecosystem and highlighted some key changes, including introduction of digital certificate of incorporation, creation of special portal for banks to facilitate account opening, digitization of account opening process for resident and non-residents for investment in the capital market etc. These reforms have greatly improved efficiency of processes, which have been duly reflected in country’s global rankings.   During the session, the Chairman apprised the OICCI’s representatives about SECP’s future endeavors in this regard to simplify regulatory requirements, reduce com...

The Securities and Exchange Commission of Pakistan (SECP) has observed that some capital market individuals are using the print/electronic/social media for giving their views/ opinions to induce the general public to trade on the stock exchange. These persons are neither qualified nor possess the requisite expertise/skill to furnish such opinions. As these views are not supported by any research and data, it encourages rumors that affect the overall investment sentiments. Misleading views of few individuals tantamount to inducing public, based on deceptive information, for investing in securities. Any such said activity by any person is prohibited in terms of Securities Act, 2015, the framework governing stock market trading.    While SECP encourages conducive regulatory environment for sustainable growth of capital markets, it is also responsible to maintain integrity and efficiency of the stock market. SECP is closely monitoring the market activities on regular b...

The Securities and Exchange Commission of Pakistan (SECP) has been undertaking a reform agenda to revitalize the capital market and promote expansion of investor base. It is felt that small and medium sized brokerage houses, alongside large ones, have a critical role to play in this regard. Based on representations received from various stakeholders including small sized brokers and recommendations of the Stock Market Reforms Committee, the SECP has issued a concept paper to introduce categorization of brokers for addressing the issue of custody of client assets. This concept is in line with international best practices and tailored to local market requirements. In the proposed regime, in order to provide maximum facilitation to small sized brokers, which would be categorized as Trading Only brokers and shall not retain custody of client assets, the minimum capital requirements for a brokerage licence are being reduced to Rs.15 million. Further, such brokers shall have th...

The SECP’s Enforcement Department— while enforcing compliance of corporate and allied laws— initiated 86 show-cause proceedings and concluded 54 proceedings against chief executives, directors and auditors of companies in February and March. While facilitating companies to strengthen their capital base, the department allowed three listed companies to issue shares by way of otherwise than right at a discount and at par.  In order to strengthen the existing regime of Corporate Social Responsibility (CSR) reporting, the SECP has joined hands with the ICAP for the external assurances of the CSR reports.  CSR reports assist organizations in understanding and communicating their vision of combining a company’s profitability with social responsibility and environmental care. Both the SECP and the ICAP have reaffirmed their commitment to developing a framework for external assurance in accordance with prominent international assurance standards, and within a mutually agre...

The development of transparent and efficient securities market is one of the prime objectives of the Securities and Exchange Commission of Pakistan (SECP). Accordingly, Securities Market Division of the SECP took enforcement actions and penalized the market participants for non-compliance with the regulatory framework during the month of March. Subsequent to the onsite inspections, enforcement actions were taken against three brokerage houses of the Karachi Stock Exchange Limited. A penalty of Rs500,000 was imposed on KASB Securities Limited primarily for   failure to maintain segregation of clients’ assets by the brokerage house. Moreover, a   penalty of Rs100,000 was imposed on   DJM Securities (Private) Limited  because of  irregularities identified in the calculation of net capital balance. Furthermore, a warning letter was issued to Time Securities (Private) Limited in the same context. In addition, 12 orders were passed for late filing of re...

The election of directors of the companies is held in general meetings, on completion of the term of office of directors after every three years as laid down in Sections 178 and 180 of the 1984 Companies Ordinance. The SECP has received many queries from the companies that the date of election of directors coincides with the forthcoming Eid-ul-Adha holidays. The SECP in this regard clarifies that if the date of election of directors of a company overlaps with the holidays, the company can hold the election of its directors immediately after the official holidays. Besides the election of directors, if any other requirement of the Companies Ordinance, which is time-constrained and its deadline coincides with the holidays, the companies are advised to comply with the respective statutory requirement, immediately after the holidays. The SECP has taken this decision to facilitate companies and encourage participation of maximum shareholders in the general meeting convened fo...

The  Securities and Exchange Commission of Pakistan (SECP) conducted an awareness session on  the 2012 Code of Corporate Governance at the Islamabad Stock Exchange (ISE). It was held in collaboration with the ISE and was attended by CEOs, CFOs, company secretaries and internal auditors of companies listed at the ISE. The session opened with the brief remarks by Mian Ayaz Afzal, Managing Director, ISE, followed by a presentation by the SECP highlighting the revised code and a presentation by the ISE on compliance and enforcement of the code and a question-and-answer session. Mr. Imtiaz Haider, Commissioner, Securities Market Division, SECP, highlighted the salient features of the revised code and the need for improving corporate governance standards to promote a vibrant capital market. He also touched on various initiatives to promote governance that the SECP has or is currently working on such as introducing the Code of Corporate Governance for SOEs, e-dividend, e-vot...

Securities and Exchange Commission of Pakistan (SECP) on Friday approved the Corporate Social Responsibility Voluntary Guidelines, 2013 aimed at encouraging body corporate to align their business strategies with their social responsibilities. The Corporate Social Responsibility Voluntary Guidelines is a preliminary step towards introducing broad parameters for accountability and reporting of CSR activities. These Guidelines are being published as guidance document for all companies. Under the Guidelines, Board of Directors of registered entities are encouraged to take ownership for formulation, adoption and implementation of CSR policy of a company. The Guidelines recommend that CSR policy be fully endorsed by Board of Directors of Company and that such policy is embedded in the vision and strategy of the company. CSR governance benchmark table has been added at the end of Guidelines that shall facilitate companies to assess their performance and for peer review. Prese...

The Securities and Exchange Commission of Pakistan has issued a notification under Section 15D of the 1969 Securities and Exchange Ordinance read with section 40B of the 1997 Securities and Exchange Commission of Pakistan Act to specify the manner and form for the disclosure of inside information by the listed companies and by the persons discharging managerial responsibilities in listed companies. The notification will result in clearly defining the roles and responsibilities of the company as well as the person possessing the information. It also describes the obligation of stock exchanges with respect to dissemination of information so that no person takes undue advantage of the inside information. Now the Commission will be in a better position to prosecute the persons involved in insider trading as the presence of newly introduced statutory obligation will restrain the persons alleged of insider trading from citing legal justifications for their illegal acts in the presence...

In order to provide maximum facilitation to investors and to bring more transparency and accuracy to the KYC (Know Your Client) process, the SECP has taken the initiative of establishing a Centralized KYC Organization (CKO) and has designated the National Clearing Company of Pakistan Limited (NCCPL) to function as the CKO. The CKO shall develop a centralized web-based system named KYC Information System and maintain separate and exclusive database for the storage of KYC information entered by the market intermediaries.  At present, all entities in the capital market are performing registration/account opening process for their clients separately, which leads to duplication of effort and waste of resources. At the same time investors desirous of opening accounts with different intermediaries for the purpose of trading/investing/dealing in the capital market have to repeatedly undergo the KYC process. The CKO shall develop a centralized web-based system named KYC Inf...

The Public Sector Companies (Corporate Governance) Rules have been approved by the SECP Policy Board. The rules are aimed at improving the governance framework of public sector companies (PSCs) in order to bring about greater transparency and plugging the huge losses of public sector enterprises, which are in the range of Rs400 billion per year. Held on Thursday at the SECP head office, the board meeting was chaired by Mr. Wajid Rana, the federal finance secretary. The board consists of the SECP chairman, federal secretaries for finance, law and commerce, and deputy governor, State Bank.   The rules have been based on the Code of Corporate Governance issued by the SECP as well as on the recommendations contained in the Guidelines on Corporate Governance of State-Owned Enterprises issued by the Organization for Economic Cooperation and Development. The salient features of the rules are o          The appointment of the...

 The Securities and Exchange Commission of Pakistan (SECP) has established a task force to identify weaknesses and gaps in the current protection mechanism for the shareholders of the companies and suggest ways and means to overcome these through shareholder activism. The decision has come in the light of the prevalent international practices. In Malaysia, Minority Shareholder Watchdog Group (MSWG) or Badan Pengawas Pemegang Saham Minoriti Berhad, was set up in 2000 as a government initiative to be part of a broader capital market framework to bring about awareness and help protect the interests of minority shareholders through shareholder activism. The MSWG is a professional body licensed under the 2007 Capital Markets and Services Act. It is a self-governing and non-profit body, funded predominantly by the Capital Market Development. It is an important channel for market discipline, encouraging good governance among public listed companies with the objective of raisi...

There is a strong need for strengthening of regulatory environment in Pakistan for the development of a modern corporate sector, Chairman, Securities and Exchange Commission of Pakistan (SECP), Muhammad Ali said while addressing a press briefing at the SECP head office on Thursday.   Briefing the journalists, the SECP chairman said that it has been decided to increase the SECP’s capacity of enforcement by 200%. He said that on-site inspection of all licensed entities including brokers would be conducted annually and offsite monitoring on a quarterly basis. This will increase transparency, investor confidence and foreign portfolio investment. In the past the SECP took action against defaulters by filing criminal complaints and sometimes referring those cases to the NAB. However, in order to ensure compliance with all the relevant statutory requirements, it is necessary that offsite monitoring and onsite inspections should be regularly conducted for all licenses/licensed...

The Securities and Exchange Commission of Pakistan has proposed certain amendments to the 2003 Companies (Registration Offices) Regulations,  whereby a substantial reduction in the additional fees for late submission of statutory returns, annual accounts and other documents filed by the companies has been proposed.  As per current regulations, on late filing of documents, heavy additional fee is being charged which might be a reason for non-compliance and low rate of filing of overdue statutory returns by companies. Through this amendment, SECP has proposed to reduce the burden of additional fee to be paid by companies. This is likely to increase compliance rate. Additional fees which are required to be paid as one time additional fee for a delay of not more than 15 days, two times for a delay of not more than 45 days and three times for delay of more than 45 days, shall now be paid as one fourth times for a delay not more than one month, one half times for a delay no...

In order to chalk out a comprehensive strategy to combat business fraud, a meeting of a special committee comprising of representatives of the Securities and Exchange Commission of Pakistan, Financial Monitoring Unit, State Bank of Pakistan, National Accountability Bureau, Federal Investigation Agency, and the police is being held on Tuesday, January 8,2013, at the SECP head office.   The committee will focus on preventing illegal business activities, including Ponzi and pyramid schemes, carried out by companies and unregistered entities. The committee has been formed to achieve synergy to prevent fraudulent business activities that cheat the public. It will share information to identify and prevent business scams. The participants will consider developing a national anti-fraud strategy and institutionalizing the coordination mechanism by setting up an all-encompassing anti-fraud body in the country. The committee will identify various areas of common interest, including ...

In November the SECP’s Corporatization and Compliance Department took 82 enforcement actions against various corporate entities and penalties amounting to thousands of rupees were imposed on five of them.  The department issued 45 show cause notices and conducted 31 hearings for various violations of the provisions of the 1984 Companies Ordinance, ranging from late filing of annual accounts, non-filing of accounts to non-holding of AGMs and faulty audit of cost accounts. Six orders were issued against five companies: Pakistan Electrical & Electronics Merchant Association (Sections 184, 242 read with 476),  Fahim Nanji & De Souza (Sections 92, 93, 172  read with 476), Chemi Multfabrics Limited (Sections 142, 184 read with 476), United Brands Limited (Section 184 read with 476) and Grand Leisure Corporation Limited (Section 184 read with Section 476).  In addition, the department received seven complaints during the month and four of them were ...

The SECP has approved various documents submitted by the stock exchanges under  the  Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012. Promulgated on May 7, 2012, the Act provides  a framework for the corporatization, demutualization and integration of the stock exchanges . The demutualization  will bring the Pakistani capital market on a par with  other international jurisdictions,  result in enhanced governance and transparency at the stock exchanges  and will attract strategic investors which will not only provide equity and technical expertise but will also result in increased visibility of these exchanges on international capital market forums. The approved documents include revaluation of assets and liabilities of the stock exchanges, plans for the segregation of commercial and regulatory functions and memorandums and articles of association of the exchanges. The SECP has also approved the authorized and p...

A meeting of the Securities and Exchange Commission of Pakistan (SECP) headed by the Chairman, Commissioner and other senior officials of SECP was held with the Board of Directors, Management and senior members of the Karachi Stock Exchange. The meeting discussed important capital market development matters and measures for enhancing activity at the Exchange by supporting retail participation. The apex and front line regulators reviewed various international best practices for the overall growth of the market and deliberated upon areas of investor protection, expansion of market outreach, new product development in equity, debt and derivative segments, activation of leverage products for improved liquidity, effective risk management and market monitoring and surveillance etc. While highlighting recent reforms in the market including revamping of capital gain tax regime, introduction of revised Code of Corporate Governance and demutualization of stock exchanges, the SECP Ch...