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  • SECP board approves amendments to exchange traded fund regulations

    SECP board approves amendments to exchange traded fund regulations

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has approved amendments to Exchange Traded Funds Regulations and other regulations at its policy board meeting which met in Islamabad under the chairmanship of Professor Khalid Mirza, said a statement on Wednesday.

    The Policy Board welcomed the new Chairman, SECP, Aamir Khan and accredited his joining to the improvement in the stock market and development of new initiatives.

    The Policy Board reviewed the implementation of its decisions of previous meetings and was satisfied with the overall workings of the Commission. The Chairman and the Board commended Aamir Khan for ensuring that the decisions have been implemented in an expeditious and progressive manner.

    In order to facilitate launch of ETFs, the Policy Board, amongst several other recommendations of the Regulations Committee of the Board, approved amendments in the Exchange Traded Funds Regulations which have been revamped to add flexibility for fund managers to appoint separate intermediaries for performing the functions of market maker and authorized participant.

    This shall enable fund managers for on-boarding market makers easily which are now subject to rationalized regulations that aim to reduce cumbersome requirements and decrease the cost of doing business for market makers.

    In addition to regulatory changes, system level modifications have also been made to enable market makers for performing their functions seamlessly with minimum inventory.

    The approved regulatory amendments aim to provide maximum facilitation to fund managers and market makers through streamlined regulatory requirements based on international benchmarks.

    Other approvals of the Policy Board include:

    (i) Amendments in Futures Brokers (Licensing & Operations) Regulations, 2018 which provide relaxation in education requirement of CEO, elimination of the requirement of NCB, deletion of the requirement of wealth statement, and reduction in frequency of reports by compliance officer,

    (ii) Amendments in the Securities Brokers (Licensing & Operations) Regulations 2016 extending the timeline for complying with financial resource requirements till December 2019, and deletion of requirement to submit NICL Building, 63 Jinnah Avenue, Islamabad certificate of commencement of business,

    (iii) Amendments in CDC Regulations – Reforms in CDC Regulatory Framework for ease of doing business by direct credit of securities in the CDS issued by way of right issue of public unlisted and private companies; relaxation in appointment of independent Transfer Agent by private and single member companies, and

    (iv) PSX to act as the sole frontline regulator and may draw upon the assistance of NCCPL and CDC to outsource the compliance function of PSX, to the extent of supervision or conducting any investigation, inspection or enquiry and monitoring compliance of securities brokers.

    The Policy Board was also given a presentation by the Commission pertaining to the implementation of the FATF Recommendations including instances of penalties imposed in various cases.

    The Policy Board directed that the FATF guidelines should be followed but the focus should remain on the areas that are critical to curb the menace of financing of terrorism/money laundering and we should take care not to affect business activity.

    The Securities and Exchange Policy Board, in pursuance of Section 12 of the Act 1997, comprises ex-officio members of the Ministries of Finance, Commerce, and Law, SBP, SECP and persons of eminence from the private sector.

  • SECP makes tax return filing compliance certificate mandatory for companies

    SECP makes tax return filing compliance certificate mandatory for companies

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has made mandatory for companies to submit certificate of income tax returns.

    The SECP issued SRO 1048(I)/2019 dated September 11, 2019 to notify Companies (Submission of Information regarding Income Tax Return) General Order, 2019.

    The regulator further said that the order would apply to companies for the financial year ended / ending or after June 30, 2018.

    The SEPC said that each company specified in the order shall file a compliance certificate with the registrar in a prescribed format with respect to its status of compliance with the requirement of filing of income tax return under the Income Tax Ordinance, 2001.

    “The compliance certificate shall be signed by the chief executive officer of the company or by the person duly authorized by the company to sign annual return.”

    Presently the SECP has 104,030 registered companies. However, the compliance level in return filing by the companies is very low.

    Under Section 114 of Income Tax Ordinance, 2001 every SECP registered company is required to file annual income tax return.

    The SECP in the latest notification said that any contravention of the requirements would be an offence and liable to penalty.

    A single member company or a private company having paid up capital of not more than Rs3 million where there is no change of particulars in the last annual return filed with the registrar and is not required to file return. The SECP said in this case compliance certificate of filing requirement is mandatory.

    Further, a company (other than a company mentioned above) where there is no change of particulars in the last annual return filed with the registrar and is not required to file annual return. “Compliance certificate as per Schedule II Shall be filed along with Form C (Annual return of companies in case there is no change of particulars since last annual return filed with the registrar).”

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    Total SECP registered companies increases to 104,030 by August

  • Total SECP registered companies increases to 104,030 by August

    Total SECP registered companies increases to 104,030 by August

    ISLAMABAD: The total registered companies with Securities and Exchange Commission of Pakistan (SECP) has reached to 104,030 by end of August 2019, a statement said on Thursday.

    The SECP registered 1,187 new companies in August 2019, out of which 94 percent companies were registered online through eService and 52 percent within same day.

    The increasing trend in registration of new companies is due to simplified and hassle free procedures of company incorporation, the SECP said.

    The SECP has recently undertaken series of reforms for providing ease of business registration. Following reforms, a company can be registered in SECP within four hours through eService.

    The SECP has recently combined the process for name reservation and incorporation to introduce a single application form for company incorporation. Moreover, the company incorporation and other regulatory fee has been reduced significantly and facility provided for payment of fee through mobile and internet banking.

    “To facilitate and guide people, the SECP has also established facilitation desks at company registration offices of Islamabad, Karachi and Lahore,” the statement said.

    The most significant development is the integration of SECP’s eServices with Federal Board of Revenue (FBR), Employees Old-Age Benefits Institution (EOBI) and business registration portals of Punjab and Sindh. Resultantly, SECP eServices is offering a one window facility for company incorporation, NTN registration and registration with EOBI, provincial social security institution, excise and taxation department and labor department of Punjab and Sindh.

    The SECP said that the new companies registered in August 2019, include 71 percent private limited companies, 26 percent single member companies and three percent were registered as public unlisted companies, not for profit associations, trade organizations, foreign companies and Limited Liability Partnership (LLP).

    Trading sector took the lead with 192 companies followed by, services with 148, construction with 132 and IT with 120.

    The SECP said that 595 companies were registered in tourism, real estate development, education, food and beverages, engineering, corporate agricultural farming, marketing and development, chemical, mining and quarrying, textile, pharmaceutical, transport, fuel and energy, and healthcare, auto and allied, and communication, logging, power generation etc.

    The SECP said that foreign investment has been reported in 38 new companies. These companies have foreign investors from China, Denmark, Ireland, Italy, Korea South, Mauritius, Norway, Saudi Arabia, Switzerland, the UK and the US.

    The highest numbers of companies, i.e. 434 were registered in Islamabad, followed by 316 and 189 companies registered in Lahore and Karachi respectively.

    The CRO in Peshawar, Multan, Gilgit Baltistan, Faisalabad, Quetta and Sukkur registered 81, 56, 47, 45, 13 and six companies respectively.

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    Total number of SECP registered companies increases to 102,864

  • Total number of SECP registered companies increases to 102,864

    Total number of SECP registered companies increases to 102,864

    ISLAMABAD: The total number of registered companies with Securities and Exchange Commission of Pakistan (SECP) has increased to 102,864 by end of July 2019, said a statement on Saturday.

    The SECP said that in July it registered 1,525 new companies. As compared to the corresponding month of last financial year, it represents a growth of 41 percent raising the number of total registered companies to 1,02,864.

    The massive increase is the result of series of recent reform measures undertaken by the SECP.

    Around 71 percent companies were registered as private limited companies, while around 25 percent were registered as single member companies.

    Four percent were registered as public unlisted companies, not for profit associations, foreign companies and Limited Liability Partnership (LLP) whereas 96 percent of these companies were registered by using online facility including applications received from overseas subscribers through eService and around 49 percent of these companies were registered on same day.

    The SECP has also upgraded its browser’s compatibility and now in addition to Internet Explorer, other browsers like Google Chrome, Mozilla Firefox and Microsoft Edge, Safari and Opera can be used for name reservation and company incorporation process.

    The trading sector took the lead and 266 new companies are registered in this sector, construction with 186, Information Technology with 183, Services sector with 177, Tourism with 69, Real Estate Development with 59, Food and Beverages with 56, Engineering with 44, Education with 43, Marketing and Advertisement with 40, Textile with 39, Corporate Agricultural Farming with 36, Pharmaceutical with 30, Healthcare with 29, Transport with 28, Chemical with 27, Mining and quarrying with 24, Communication with 21, Auto and Allied with 18, Fuel and Energy with 16, Logging with 14, Broadcasting and Telecasting with 12, Paper & Board, and Power Generation with 11 each and 86 companies were registered in other sectors.

    Foreign investment has been reported in 58 new companies. These companies have foreign investors from, Australia, Austria, Canada, China, Denmark, Germany, Hong Kong, Iran, Italy, Korea South, Norway, Saudi Arabia, Serbia, Sweden,, Turkey, the UAE the UK and the US.

    The highest numbers of companies, i.e. 603 were registered in Company Registration Office-Islamabad, followed by 378 and 283 companies registered in Lahore and Karachi respectively.

    The Company Registration Offices in Peshawar, Multan, Faisalabad, Gilgit-Baltistan, Quetta, and Sukkur registered, 100, 76, 41, 27, 10 and 7 companies, respectively.

  • Naqvi to make capital market attractive place for investors: PTBA

    Naqvi to make capital market attractive place for investors: PTBA

    KARACHI: Pakistan Tax Bar Association (PTBA) on Saturday welcomed the appointment of Syed Masoud Ali Naqvi as Chairman Policy Board of the Securities and Exchange Commission of Pakistan (SECP).

    In a statement, the tax bar said that Naqvi would able to guide the SECP effectively on various matters and challenges that the commission was facing as a regulator.

    The tax bar particularly pointed out that Naqvi would able to make the capital market an attractive avenue for local and foreign investors.

  • SECP notifies regulations to promote electronic trading of commodities

    SECP notifies regulations to promote electronic trading of commodities

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has notified regulations to promote warehouse receipt financing and electronic trading of agricultural commodities.

    The SECP on Friday issued Collateral Management Companies (CMC) Regulations, 2019 under the Companies Act, 2017 to promote warehouse receipt financing and electronic trading of agricultural commodities.

    Under these Regulations, any public limited company with a minimum paid-up capital of Rs. 200 million will be eligible for seeking permission of SECP to register as a CMC.

    A CMC, through its accredited warehouses, will provide storage and preservation services for a range of agricultural commodities.

    In doing so, a CMC, through its electronic warehouse receipt system, will issue warehouse receipts which can be used by farmers/depositors of agricultural commodity for financing from financial institutions and trading of electronic warehouse receipt at the exchange.

    The CMC will play an effective role in the agriculture value chain by ensuring security of collateral stored in the accredited warehouse through its robust oversight mechanism.

    Earlier, the SECP through a notification dated July 2, 2019 issued draft regulations for public consultation.

    During this consultative process, comprehensive deliberations were carried out with key stakeholders including the State Bank of Pakistan, Pakistan Banks Association, Pakistan Agricultural Coalition, Pakistan Mercantile Association and commercial banks.

    After incorporating comments of the stakeholders, the regulations have been notified.

    Salient amendments, after public consultation, include reduction in the registration fee of a CMC, removal of requirement for periodic accreditation, easing of documentary requirements for sponsors of a CMC, allowing electronic warehouse receipt to be traded on the exchange, and according enforcement powers to the CMC for cancelling accreditation of warehouse upon occurrence of certain events.

    SECP envisages that these amendments would help support its overall strategic objective of promoting ease of doing business.

    Promulgation of these regulations, in addition to providing a well-designed collateral management system, is envisaged to complement the agenda of the Government for uplifting agriculture sector which entails improved access to finance for farmers, improved farmer profitability and reduced risk for creditors through secure collateral.

  • Raising loans on interest prohibited, SECP issues draft amendment to Shariah regulations

    Raising loans on interest prohibited, SECP issues draft amendment to Shariah regulations

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Thursday issued draft amendments to Shariah Governance Regulations, 2018 saying that raising loans on interest is prohibited.

    In regulation 11, the SECP proposed following amendments:

    “(ii) the collective amount raised as loan on interest whether long-term or short-term debt does not exceed thirty percent of the market capitalization or total assets of the company, knowingly that raising loans on interest is prohibited whatsoever the amount is;

    “(iii) the total amount of interest-bearing deposits and Shariah non-compliant investments, whether short-, medium- or long-term, shall not exceed thirty percent of the market capitalization of total equity or total assets of company knowingly that interest taking deposits and investments are prohibited whatsoever the collective amount is”;

    The SECP further proposed amendment:

    “Provided that the prevailing Shariah screening criteria of the Exchange for all shares Islamic index may be used only for the companies on the all shares Islamic index, and shall be replaced with the above criteria by 30th June 2020.”

    For disposal of Shariah non-compliant investments, the SECP proposed:

    “Shariah compliant companies shall divest the Shariah non-compliant investments above thirty per cent threshold within a period of one year or when the market value of the investment equals the cost of investment, whichever is earlier:

    “Provided that the Commission may, for reasons to be recorded in writing and subject to such conditions or restriction as it may deem fit to impose on recommendation of the Shariah Advisory Board, relax any of the requirements of this regulation in case of any difficulty arises in giving effect to any of the requirements of this regulation in a particular case, or class of cases.”

    In regulation 3, it is proposed:

    “Provided that the companies on PSX All Shares Islamic index shall be deemed to be Shariah compliant till December 31, 2019:

    “Provided further that for purpose of availing tax rebate, the Shariah compliant companies referred in the first proviso shall meet the criteria as prescribed in Income Tax Ordinance, 2001.”

  • No action against companies for gold, valuables recovery: SECP

    No action against companies for gold, valuables recovery: SECP

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Tuesday strongly refutes the reports attributing the commission for taking action against companies to recovery gold and other valuable properties.

    In a statement the SECP said, being the apex regulator of the corporate sector, the SECP is taking all necessary steps to ensure beneficial regulation and growth of capital market and corporate sector in Pakistan.

    SECP strongly refutes news items appearing in a section of the press attributing any purported action against companies to recover gold and other valuable properties.

    “No crackdown of any sort is being planned or under consideration of the Commission,” it said.

    It is also clarified that SECP does not regulate or enforce Income Tax Ordinance, 2001 or Benami Transactions (Prohibition) Act, 2017.

    SECP powers are restricted to offences provided in the SECP Act, 1997, and other administered legislation as provided in its Schedule.

    The recently notified Rules, i.e. the “SECP (Search and Seizure) Rules, 2019” are a requirement of law under section 31 of the SECP Act, 1997, which merely lays down strict procedures for use of powers by the SECP’s investigation officers.

    It is reiterated that these powers are restricted to investigations ordered by the Commission under the SECP-administered legislation. As wrongly reported in a section of the media no new powers have been bequeathed to the SECP.

    It is clarified that the powers of search and seizure and forced entry have been part and parcel of the SECP Act, 1997, since the establishment of the Commission.

    It is stressed here that recently notified Rules are aimed at helping the Commission to curb any potential misuse of authority by the investigation officers.

    The Rules, inter alia, require investigation officers to first seek authorization, in writing, from the Commission, comprising of five Commissioners for the purpose of search and seizure. Further, in certain circumstances, the order from the relevant magistrate is also required.

  • FBR asks SEPC to ensure quality financial reporting by registered companies

    FBR asks SEPC to ensure quality financial reporting by registered companies

    ISLAMABAD: Federal Board of Revenue (FBR) has asked Securities and Exchange Company of Pakistan (SECP) to ensure quality of financial reporting of registered companies.

    In this regard Chairman FBR Syed Muhammad Shabbar Zaidi, in his letter to Chairman SECP, has requested to ensure correct and transparent submission of financial statements by the companies.

    In his letter the Chairman has stated that it has been observed that in many cases the quality of the accounts/financial statements prepared by the financial businesses specially in the cases of private limited companies is not in line with the quality standards and in many cases huge additions to income, are made, which are in many cases, are non-defensible, in taxation proceedings.

    Chairman FBR further added that quality of ‘Audit’ by the taxation officer is not as per best practices. FBR is improving the system and shall seek Institute’s assistance or guidance on the matter, he added.

    The extension in date of filing for return for companies also for Tax Year 2018 has only been given to provide an opportunity to the companies, especially private companies, to review their accounts and file improved position if required. In the past, FBR’s stance on the matter was different and as per information, no case was ever referred to for any disciplinary proceedings against Auditors by the institute or Management of the companies by SECP to FBR.

    “Now we intend to act diligently in the matter,” Chairman FBR added.

    The government has initiated an overall reform package for improving documentation and improving the quality of financial accounting which form the basis of taxation.

    The accounts prepared under the Companies Ordinance, 2016 form the basis for the same. However, this objective can only be achieved once the quality of annual financial statements are in line with the international best practices. It is therefore suggested that special and concerted emphasis be laid down by both the addressee institutions for assuring that the financial statements furnished reflect correct financial position and there is no possibility of any understatement, including non-compliance with the laws of taxation as prevalent in Pakistan especially withholding provisions.

    In order to achieve this task, it is advised that immediate actions be undertaken to start the reformed process. Chairman FBR stated that necessary instructions be issued for the same to the relevant field formations.

    Furthermore, if allowed under the law, the investigations and disciplinary proceedings initiated against the Directors and the Auditors by SECP and the Institute respectively, if any, are shared with the Federal Board of Revenue, if possible, under the law, in order to ensure proper accounting of income and amount of taxes due.

    Chairman FBR assured that such information will remain confidential. Chairman FBR also suggested an urgent meeting with Chairman SECP in this regard.

  • SECP holds consultation session to review Bancassurance regulations

    SECP holds consultation session to review Bancassurance regulations

    KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has organized a stakeholders’ consultations session to review the changes in insurance regulatory framework governing Bancassurance, a statement said on Friday.

    Bancassurance has been contributing towards the growth of the insurance sector by increasing insurance penetration and addressing financial inclusion in the Pakistan.

    SECP has in the past issued guideline in 2010 and subsequently Bancassurance Regulations, 2015.

    Due to the recent bearish performance of the stock market, the insurance policyholders have suffered short term losses due because most of the products sold to bancassurance is unit linked in nature.

    Therefore to provide impetus to development of insurance market, particularly the Bancassurance, the SECP has developed amendments in the Bancassurance Regulations, 2015 and holds a stakeholders’ consultation session on June 12, 2019 at Karachi.

    The session was attended by the State bank of Pakistan (SBP), insurance companies, Federal Insurance Ombudsman (FIO) and members of the Small Dispute Resolution Committees.

    The participants thoroughly discussed the proposed changes and appreciated the SECP for taking such initiatives.

    However, the industry participant placed emphasis that SECP should give due consideration to the market development aspects as well as increasing regulatory controls for protection of the policyholders’ interest.

    The participants stated that under the current economic conditions SECP should also give consideration to ease of doing business.