PTBA Decries Security Clearance Denials for Foreign Investors

PTBA Decries Security Clearance Denials for Foreign Investors

Karachi, January 23, 2025 – The Pakistan Tax Bar Association (PTBA) has voiced profound apprehension over the rejection of security clearances for foreign investors. The association has formally reached out to Syed Mohsin Raza Naqvi, Federal Minister for Interior, highlighting the challenges these decisions pose to the country’s investment landscape.

With its presence in 32 cities nationwide and a diverse membership base of 12,500 professionals—including chartered accountants, lawyers, and tax practitioners—the PTBA is a key stakeholder in Pakistan’s fiscal ecosystem. The current Executive Committee of PTBA, assuming office this year, has pledged to facilitate both foreign and domestic investors in compliance matters, tax remittance processes, and registration formalities.

A critical issue raised by the PTBA concerns the rejection of security clearance for foreign investors, particularly those establishing 100% foreign equity companies under the Companies Regulations, 2024. Per these regulations, foreign directors and subscribers must obtain security clearance by submitting GR-Performa, undertakings, and other necessary documentation via the Securities and Exchange Commission of Pakistan (SECP) to the Ministry of Interior.

Despite fulfilling these formalities, numerous companies have recently been receiving abrupt rejection notices from the SECP. These notices, devoid of explanations or reasons for the denial, leave investors in a state of uncertainty. Moreover, they fail to provide any opportunity for the affected parties to address discrepancies or clarify defects in their submissions.

This lack of transparency has triggered alarm among foreign investors who, after initiating substantial investments and operational activities in Pakistan, find their efforts derailed without recourse. The PTBA warns that such unilateral rejections send a detrimental message to international stakeholders and contradict the government’s stated objective of fostering foreign direct investment.

The association emphasizes that these actions jeopardize entire business setups and erode investor confidence, which could severely undermine Pakistan’s ability to attract foreign capital. In its correspondence, the PTBA has urged the interior minister to intervene promptly and establish a transparent and fair process for granting security clearances.

Addressing this pressing issue, the PTBA asserts, is vital to preserving Pakistan’s investment climate and sustaining the trust of foreign entities willing to contribute to the nation’s economic progress.