Draft legislation aims to create a dedicated regulatory framework for venture capital funds, attract investment and improve start-up access to risk capital.
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has shared a draft Venture Capital (VC) Bill with the Board of Investment (BOI) for public consultation as part of efforts to establish a dedicated legal framework for venture capital activity in Pakistan.
The proposed legislation is aimed at improving access to risk capital, attracting domestic and foreign investment, supporting start-ups and high-growth businesses, creating employment opportunities and contributing to economic growth.
According to the SECP, the draft Bill was prepared under a Federal Government initiative that assigned the regulator the task of developing a bespoke, standalone regulatory framework for venture capital.
The initiative also seeks to improve access to funding for start-ups and businesses with high growth potential.
Proposed framework for venture capital
Pakistan has significant potential in the start-up, technology and innovation sectors, but access to formal venture capital remains limited.
The SECP noted that a substantial portion of venture capital activity involving Pakistani businesses has historically been structured offshore or outside the domestic regulatory framework.
The proposed legislation seeks to address this gap by establishing a simple and transparent regulatory framework for venture capital funds and fund managers operating in Pakistan.
The framework envisages light-touch licensing and registration requirements, simplified operational structures and clearly defined governance and reporting standards.
The SECP said the proposed framework would also facilitate the formalisation of venture capital activity within Pakistan’s regulatory system.
SECP highlights investment potential
SECP Chairman Dr Kabir Ahmed Sidhu said the proposed legislation could help channel private capital towards emerging Pakistani businesses.
“The Bill recognises the high-risk and innovation-driven nature of venture capital and seeks to reduce regulatory barriers while ensuring effective governance and investor protection,” he said.
The proposed framework is intended to balance the flexibility required by venture capital investors with appropriate regulatory oversight and investor protection.
By creating a dedicated legal structure, the SECP expects the sector to become more accessible to investors while providing start-ups with greater opportunities to raise capital domestically.
Stakeholder consultation planned
As the next step, the SECP and BOI will conduct consultations with key stakeholders before the draft legislation moves forward through the formal legislative process.
The consultation process will include start-ups, venture capital fund managers, legal and financial experts, the State Bank of Pakistan, Pakistan Stock Exchange and relevant industry associations.
The regulators will seek feedback on the proposed framework and consider stakeholder input before finalising the draft.
The initiative is expected to support the development of Pakistan’s domestic venture capital ecosystem by creating a clearer regulatory environment for investors and fund managers and improving funding opportunities for innovative and high-growth enterprises.