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  • SECP issues guidelines for license renewal amid COVID-19

    SECP issues guidelines for license renewal amid COVID-19

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has issued guidelines for license renewal in order to facilitate companies considering difficulties due to COVID-19.

    The SECP issued Circular No. 19/2020 for extension in time for renewal of licenses due to COVID-19.

    The regulator said that the COVID-19 (coronavirus) had affected many businesses around the globe and had been declared as pandemic.

    In order to facilitate the shareholders/directors/employees during this ongoing pandemic, the SECP issued the guidelines regarding renewal of their licenses, issued in pursuance of section 42 of the Company Law.

    The SECP said that the companies whose license were due for renewal before the month of February 2020, and had not applied for renewal, their license shall be revoked in accordance with the provision of Section 42(5) of the Companies Act, 2017.

    The SECP further said that the companies whose license had been expired in the months of February, March, April and May 2020 but had not applied for its renewal would continue to carry on their business and their license would not be revoked till June 30, 2020. However, upon receipt of their applications, license shall be renewed from the date of expiry of their existing license.

    The regulator further said that the companies, which had applied for renewal of their license either before or after February 01, 2020 and certain deficiencies were also communicated to them, were required to respond to the quarries latest by May 30, 2020, failing which their license would be revoked.

    “Companies, which do not find any difficulty in complying with the requirements of the renewal of their license, may apply in a routine manner,” the SECP said.

  • OICCI lauds SECP for improving regulatory environment

    OICCI lauds SECP for improving regulatory environment

    KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) has praised Securities and Exchange Commission of Pakistan (SECP) for improving regulatory environment for registered entities.

    In a statement on Monday the OICCI felicitated the SECP on the Companies (Amendment) Ordinance, 2020 promulgated on April 30th.

    The Chamber, along with other leading business association, has in the past challenged some of the over-regulatory conditions introduced in the Companies Act 2017 without due engagement of the key stakeholders.

    The amendments to the Companies Act 2017, according to OICCI members, will further improve the regulatory environment in line with regional practices.

    Abdul Aleem, CE/Secretary General of the OICCI commenting on the amendments said: “foreign investors have always supported regulatory environment which are predictable, consistent and transparent.

    “The recent April 30th 2020 amendments to Companies Act 2017 had been under discussion between the SECP and other stakeholders, including OICCI during a series of “Consultative session and feedback” meetings held in 2018 and 2019 and acceptance of several recommendation should be a matter of satisfaction for business entities.”

    He further said ‘a few recommendations are still not part of the proposed amendments and we shall request SECP to also review these so as to attract sizeable FDI in these challenging, post COVID 19, global investment environment’.

    Pakistan’s FDI for past several years has been less than one percent of the GDP against the regional norm of 3 percent and above.

    Some of the key amendments in the Act which were challenged by the chamber, which have now been addressed in the amendments include; limiting the scope of the definition of “officer”, allowing a non-listed company to buy back its shares in line with the right already given to listed companies, doing away with the requirement for a ‘foreign national’ to hold National Tax Number as per the provisions of IT Ordinance, 2001, deletion of the clause where a director could be disqualified for a period up to five years if the affairs of the company have purportedly been conducted in a manner which has deprived the shareholders a reasonable return, deletion of the complete section whereby, inter-alia an independent director and a non-executive director were held liable in respect of some acts of omission or commission by a listed or a public sector company, deleting the personal liability of the Directors whereby they were required to make payments under certain circumstances including a situation where the return on the investments was not according to certain criteria, doing away with the impractical provision to deposit any unclaimed or unpaid amount to the credit of the Federal Government, introduction of a ten percent shareholding threshold in the much debated section on Companies’ Global Register of Beneficial Ownership and deletion of the section requiring security clearance before appointment of Directors.

    A key matter recommended by OICCI, and other stakeholders, to delete the reference to ‘lineal ascendants and descendants’ from the ambit of related parties has not been addressed and OICCI has again requested SECP to review this important matter.

    “Negative perception of Pakistan among potential foreign investors has been a key impediment in attracting sizeable FDI in the country. Pakistan’s rating in the World Bank Ease of Doing Business has only recently improved to 108 from being 147 in 2018 and needs much more business friendly measures to attract its due share of the global/regional FDI, ”Aleem concluded.

  • SECP facilitates companies in IAS 39 requirements

    SECP facilitates companies in IAS 39 requirements

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SEC) has allowed relief registered companies that are applying IAS 39/principles of IAS 39 (for Available for Sale equity instruments).

    The SECP issued S.R.O. 414 (I)/2020 and allowed following relief from the requirements contained in IAS 39 in relation to their Available for Sale (AFS) Equity Investments as follows:

    (a) The company/entity can opt to show impairment loss (if any, due to significant or prolonged decline in fair value of AFS equity investment portfolio), as at March 31, 2020, in the statement of changes in equity.

    (b) If the above short-term relief is opted, the company/entity shall disclose in the notes to the financial statements:

    (i) amount of impairment loss included in the statement of changes in equity under (a) above;

    (ii) amount of profit or loss after tax, arrived at by accounting for the impact of impairment loss in accordance with IAS 39; and

    (iii) Earnings per share based on the (ii) above.

    (c) The dividend income and actual realized gain/loss arising from the de-recognition of AFS equity instruments shall be recognised in the profit and loss account in accordance with the requirements of IAS 39.

    (d) The amount of loss taken to equity as per (a) above, shall be treated as a charge to profit and loss account for the purpose of distribution as dividend, where applicable.

    (e) The amount taken to equity as per (a) above for an AFS equity instrument, adjusted with the fair value change of this AFS equity instrument during the period from April 01, 2020 to June 30, 2020, shall be considered for impairment in accordance with the requirements of IAS 39.

    (f) The impairment loss (if any), as of June 30, 2020, as per (e) above shall be taken to the profit and loss account for the year/period ending June 30, 2020.

    The SECP said that companies/entities willing to follow the full requirements of IAS-39 as applicable are encouraged to do so.

  • One month free coverage to motor insurance policy holders

    One month free coverage to motor insurance policy holders

    ISLAMABAD: Securities and Exchange Companies of Pakistan (SECP) on Wednesday directed insurance companies to allow one month free coverage to motor insurance policy holders.

    The regulator in a press release said that in light of the outbreak of COVID-19 (Coronavirus) it has been advised non-life insurance companies to grant one month free of cost extension in insurance coverage to all motor insurance policyholders.

    The ongoing lockdown situation across the country has resulted in a significant decline in traffic density. With intercity public transport almost at a significant halt and limited within the city commute, it can be inferred that the policyholder claims in relation to motor insurance policies, would also have significantly declined.

    Taking into account the decline and/or the anticipated low claim ratio in motor business due to lockdown, insurance companies have been encouraged to take steps to facilitate and pass on the benefit of low claim ratio to motor insurance policyholders.

    As the fight against COVID-19 pandemic continues, it becomes imperative that insurance industry show its commitment to serve its policyholders by providing maximum relief and facilitation in all operational aspects. SECP believes that such good gestures in these difficult times will further increase policyholder’s confidence in the insurance sector.

  • SECP extends submission of AML/CFT quarterly information up to May 31

    SECP extends submission of AML/CFT quarterly information up to May 31

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has extended the date up to May 31, 2020 for submission of mandatory information related to anti money laundering (AML)/ counter financing of terrorism (CFT) for the corporate sector.

    The SECP on Monday due to the recent outbreak of pandemic Coronavirus (COVID- 19) and its impact on the public health and the lockdown situation in the country, the Regulated Persons are facing various difficulties while ensuring compliance with regulatory requirements related to reporting and submission of information in the manner prescribed under Directive 55(1)/2020 dated January 28, 2020.

    The term Regulated Person (“RP”) has been defined in the Anti Money Laundering and Countering Financing of Terrorism (AML-CFT) Regulations, 2018 (“the Regulation”) as the “Regulated Person” means Securities Brokers, Futures Brokers, Insurers, Takaful Operators, NBFCs and Modarabas for the purposes of these regulations.

    The Securities and Exchange Commission of Pakistan (SECP) in discharge of its statutory responsibilities for effective AML/CFT regulation of its regulated financial sector seeks to clarify as follows:

    i. Relaxation in submission of quarterly information under Directive 55(1)12020:

    In view of Directive 55(1)12020 dated January 28, 2020 a thirty days extension in filing of AML/CFT quarterly information is provided to all RPs facing difficulties in submission of information for period ended March 31, 2020 that is required to be submitted by April 30,2020.

    Now, the said extension to submit quarterly information is being extended till May 31, 2020 for the quarter ended March 31, 2020 only.

    ii. Companies to make necessary work arrangements for ensuring regulatory compliances:

    As safety of employees is priority of the companies during the coronavirus (COVIT-19) outbreak, therefore RPs are encouraged to make necessary arrangements for the use of technology and related applications in order to enable them to work from home to meet the regulatory compliances.

  • SBP advises banks to register security interest under STA

    SBP advises banks to register security interest under STA

    KARACHI: State Bank of Pakistan (SBP) on Friday advised banks, microfinance banks and development financial institutions (DFIs) to register their security interest under secured transaction laws.

    The SBP in a circular said that with a view to provide for registration of charge on security/collateral offered by un-incorporated entities including sole proprietorships and partnerships and thereby enhancing their access to finance, The Financial Institutions (Secured Transactions) Act, 2016 (STA) was promulgated on July 1, 2016.

    The government has authorized the Securities and Exchange Commission of Pakistan (SECP) to operate Secured Transactions Registry (STR) to record statements in relation to security interests created by entities under STA. SECP is going to launch the Secured Transactions Registry (STR) under the STA on April 27, 2020 for registration of security interests on movable assets of entities, other than companies.

    In view of the above, all the banks, microfinance banks and DFIs are advised to register their security interests against movable assets of entities for future as well as prior security interests (i.e. security interests created before the operationalization of the STR as provided under section 73 of the STA) in the STR.

    The security interest has been defined as: “a right, title, encumbrance or interest of any kind upon movable property created or provided for by a security agreement in relation to a transaction that in substance secures the payment or performance of a customer’s obligation under a finance without regard to the form of the transaction or the terminology used by the parties or the identity of the person who title to the movable property, and includes any charge, mortgage, hypothecation, fixed charge, floating charge, assignment, lien, pledge, assignment of receivable by way of security and transactions under which a secured creditor retains title such as a finance lease, hire purchase agreement, sale and lease back arrangement, conditional sale agreement and retention of title arrangement, having similar effect.”

  • SECP highlights difficulties in present tax regime

    SECP highlights difficulties in present tax regime

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has highlighted difficulties faced by corporate sector due to prevailing tax regime.

    The SECP chairman called upon the chairperson of Federal Board of Revenue (FBR) on Wednesday to discuss a number of taxation policy reforms that are essential for the development of Pakistan’s capital markets, corporate sector, non-banking finance industry, REIT and insurance sector.

    While presenting the proposals, the SECP chair highlighted key issues and challenges being faced by the SECP regulated sectors due to prevailing taxation regime.

    He emphasized that growth and development of the formal economy was largely dependent on providing a level playing field where individuals and businesses were encouraged to participate through regulated and documented sectors of the economy.

    The FBR chairperson while discussing the proposals agreed that documentation of the economy was a key priority of the government.

    Development of the formal economy through fiscal incentives and removal of taxation anomalies could ultimately increase the country’s overall revenue generation capacity.

    It was agreed that the SECP and FBR would meet again, within a fortnight, to take the discussions forward.

  • SECP relaxes regulatory requirement for AMCs

    SECP relaxes regulatory requirement for AMCs

    In a bid to mitigate the economic fallout of the ongoing COVID-19 pandemic, the Securities and Exchange Commission of Pakistan (SECP) has announced a series of relaxations in regulatory requirements for asset management companies (AMCs).

    (more…)
  • SECP shuts registration offices, facilitation centers amid coronavirus outbreak

    SECP shuts registration offices, facilitation centers amid coronavirus outbreak

    The Securities and Exchange Commission of Pakistan (SECP) has announced the closure of Companies Registration Offices (CROs) and facilitation centers until further notice as a preventive measure against the spread of coronavirus disease (COVID-19).

    (more…)
  • SECP extends insurance license renewal date

    SECP extends insurance license renewal date

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has extended license renewal date for insurance brokers in the wake of coronavirus outbreak.

    The SECP issued Circular No. 12 on Monday to extend the date for license renewal for insurance business.

    The SECP said that considering the gravity of the pandemic coronavirus (COVID-19) on public health and lockdown situation in the country, insurance brokers, insurance surveyors and authorized surveying officers are facing difficulties while ensuring compliance with regulatory requirements related to renewal of license under the Insurance Ordinance, 2000.

    The SECP said that in order to facilitate the insurance brokers, insurance surveyors and ASOs during the ongoing pandemic, the regulator issued following guidelines regarding renewal of licenses:

    (i) Any insurance brokers/insurance surveyor/ASO whose license has expired or will expire during the period from March 15, 2020 to May 15, 2020 shall continue to carry on its business without renewal of its current license with the commission;

    (ii) The above relaxation shall be effective for a period of two months i.e. it shall end on May 15. The respective insurance brokers, insurance surveyors, and ASOs shall be bound to file their applications prior to the deadline of May 15, 2020.

    (iii) Upon receipt of the application, license shall be renewed effective from the date of expiry of the previous license.

    (iv) Insurance brokers, insurance surveyors and ASOs facing difficulties to arrange documents, required under the Ordinance for renewal of license may avail the above mentioned relaxation.

    (v) While surveyors/ASOs can file applications online through e-services, insurance brokers may send their applications to the commission via email until the expiry of the lockdown; and

    (vi) All insurance companies/ general takaful operators shall continue to do business with insurance brokers /insurance surveyors/ASOs considering the grace period of two months for any license expired after March 15, 2020.