The Securities and Exchange Commission of Pakistan (SECP) has noted with concern recent news in the print and electronic media regarding campaign by members of the Karachi Stock Exchange (KSE) against a non-member director as chairman of the KSE Board. The SECP explicitly dispels the likelihood of any restructuring in the board of directors of the stock exchanges for reversing the mandatory requirement of the chairman of the board being elected from amongst the non-member directors. The SECP while continuing with its well-thought out broad based capital market reform agenda aimed at promoting good governance, transparency and efficiency in the capital markets, had earlier in August 2002, successfully reconstituted composition of the board of directors of the stock exchanges, which now consists of five member directors elected by the members, four non-member directors to be appointed by the SECP and the Managing Director of the stock exchange. In December 2005 for ensuring that confl...

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has ordered suspension of trading in the shares of listed companies that are in continual violation/non-compliance of securities market laws, initially for a period of 60 days or till further orders. The SECP taking cognizance of the fact that such companies not only pose serious threat to the development of a robust capital market but also inhibit investors’ confidence due to lack of transparency, in consultation with the stock exchanges, had earlier initiated a comprehensive exercise for reviewing the status of these listed defunct/non-compliant companies. It was established that such companies while giving the impression of a broad-based Pakistani capital market do not fairly reflect depth in the market and distort functioning of the stock exchanges as true barometers of the economy. While capital markets play a crucial role in efficiently channelling financial resources to productive uses, such non-...

ISLAMABAD –August 5: In order to strengthen the integrity and soundness of the securities market for the benefit of the investors and other market participants, the Securities and Exchange Commission (SECP) is striving to maintain fair, transparent and efficient markets. The Securities Market Division of the SECP actively monitors the trading activities of the stock market to check the compliance of prevailing regulatory framework and to investigate potential violations of the securities laws. This is evident from numerous enforcement cases initiated and actions taken during the current year. Based on the severity of the offence, strict actions have been taken by the SECP as provided under the law. In the seven months of 2010, legal proceedings were initiated in seven different cases for violations of securities laws with special reference to insider trading, short/blank selling, wash trades, erroneous trades and broker misconduct; the orders were issued after conducting hearings and...

A senior team of FBR led by Mr. Asrar Raouf, Honorable Member Tax Policy, Federal Board of Revenue, met with representatives of the Karachi Stock Exchange to address issues related to capital gains tax. A consensus was reached on achieving tax payer facilitation to ensure widening of the tax net. Confidence building measures to achieve this include: 1. The committee considered various proposals to avoid hard-ship to tax-payers. A sub-committee comprising members from FBR, and The Karachi Stock Exchange was constituted to consider the same. 2. FBR will establish a separate cell for facilitation of foreign investors at LTU and RTO. This information will be provided to the Stock Exchange. 3. Financing income/markup under securities lending and borrowing regulations, margin financing and any other leverage products as approved by SECP, would be taxed at the rate of 10%, as full and final tax. 4. Gain or loss under day trading and trading in derivative products would be subject to CGT und...

In order to facilitate the corporate sector, the Securities and Exchange Commission of Pakistan has re-launched the Companies Regularization Scheme (CRS) and Companies Easy Exit Scheme (CEES) simultaneously. Both schemes shall remain operative for a period of three months, from July I to September 30, 2010. The objective of these initiatives is to provide regularization as well as exit facilities to the defaulter companies at the same time. Now these companies can either get their defaults of non-filing of documents regularized under CRS or avail the exit facility under CEES. The CRS provides defaulter companies an opportunity to file their overdue statutory returns and annual accounts. It may be mentioned that normally the defaulting companies have to file their overdue returns with usual filing fee plus three time additional fee and also face penal action for late filing of documents. This Amnesty Scheme shall, however, provide the companies to pay less fee and also absolve them of...

Mohammed Sohail Local and foreign investors have raised many questions since the imposition of tax on gains made through share trading. It is so, as this tax has been imposed after a gap of more than three decades. In order to clarify some issues, following is a response to frequently asked queries. These answers are based on our understating and may change if tax authorities clarify the matter which they hopefully will in next few days. When will this tax be imposed? This tax will be imposed from July 1, 2010 on realised capital gains. There is some confusion regarding tax rate mentioned for tax year 2010 which we believe would be clarified as this tax will not be implemented before June 30, 2010. What is the rate of tax? For FY11 the gains realised from securities held for less than six months, the rate of annual income tax is 10 per cent and for securities held for more than six months and less than one year the annual tax liability would be 8 per cent of the gained amount. Again th...

Islamabad, May 17, 2010: The Securities and Exchange Commission of Pakistan (Commission) has filed a criminal complaint in the competent Court of Law against Capital One Equities Limited, ex-member Karachi Stock Exchange (KSE) along with its directors, officers and persons involved in non-transfer of shares/funds and unauthorized pledges of client’s shares and other prohibitive activities under the Section 24(2) of Central Depositories Act, 1997 as well as offences under relevant provisions of Pakistan Penal Code. The Honorable Court vide Order dated May 13, 2010 has issued warrants of all the accused persons. The Commission received number of investors’ complaints/claims against KSE Brokers during the first half of 2009 mainly pertaining to the alleged non-transfer of shares and non-payment of funds. The Commission directed the Brokers to resolve complaints and to make necessary arrangements for transfer of shares into respective Central Depository Company (CDC) accounts of the comp...