Tag: SECP

MoU signed for digital aggregation of insurance products

KARACHI: Insurance Association of Pakistan (IAP) and Central Depository Company of Pakistan Limited (CDC) has signed a Memorandum of Understanding (MoU) for digital aggregation of insurance products CDC’s Emalaak Financials platform.

Sadia Khan, Commissioner – Securities and Exchange Commission of Pakistan (SECP) presided at the MoU Signing Ceremony at the CDC House, Karachi.

At the occasion, describing the features of the platform, CEO CDC Badiuddin Akber said: “This Fintech solution of ‘Emlaak Financials’ is indeed a landmark initiative of national significance, as it aims to become ‘Digital Financial Super Market’ in Pakistan by leveraging the potential of technology to increase outreach for various financial products.”

Azfar Arshad, Chairman IAP applauded the efforts of CDC and SECP and said that this initiative will pave the way for the growth of the Insurance Industry.

While addressing the occasion, Commissioner SECP – Ms. Sadia Khan said that this digital transformation is expected to have an impact throughout the insurance value chain, from underwriting and pricing of products, their marketing, and distribution, through to claims processing and the ongoing customer servicing.

The distribution of insurance products through the digital portal EMLAAK is expected to provide low-cost and centralized solutions to policyholders by providing comparative cost-benefit analysis of different products on a centralized platform.

This will lead to a reduction in the protection gap as new market segments are accessed as well as an increase in the insurance penetration.

The goal of the regulator is to enable the insurance industry to play its rightful role both in terms of providing the social safety net as well as the development of the capital market.

She commended the role of CDC in bringing this new initiative to life by capitalizing on its technological capability.

The event was attended by the senior members of IAP’s Executive Committee and other high-ranking officials of the Insurance industry.

CDC, NIFT sign agreement to enable digital payments for mutual fund investors

December 3, 2021
SEC Pakistan amends regulations to facilitate startups

ISLAMABAD: The Securities and Exchange Company of Pakistan (SEC Pakistan) has amended regulations to facilitate startups and small companies in raising equities through conventional modes.

The regulator introduced amendments in the Companies (Further Issue of Shares) Regulations, 2020 to address the impediments faced by the corporate sector, particularly startups and small companies, in raising equity through conventional modes, according to a statement issued on Wednesday.

Key changes include permission to convert one class of shares into another class, issuance of shares with differential rights without the approval of the SECP, and specification of mechanism for valuation of non-cash assets.

As per the law, companies can have more than one kind of share conferring varying rights of dividend, voting, and participation depending upon the needs of its capital providers. The requirement of prior approval of SECP has now been abolished. Such a measure will considerably help reduce the administrative burden and will contribute towards the growth of the fast-paced corporate world by removing a layer of regulatory approval.

Another vital amendment is to permit conversion of one class or kind of shares into another class or kind e.g. ordinary into preference shares. Currently, the Regulations only allow conversion of preference shares into ordinary shares while no mechanism is provided for other classes of shares.

The change aims to facilitate companies in maintaining an optimal capital structure considering their own financial needs and the demands of their shareholders.

Besides, a complete mechanism for the valuation of immovable property, intangible assets, or services has been introduced.

Now, the consulting engineers registered with Pakistan Engineering Council and QCR rated chartered accountant firms will be eligible to conduct valuation for the purposes of the Act.

These amendments have been introduced in consideration of numerous queries and suggestions received from small companies and startups, and are at par with the international jurisdictions.

SECP warns against investing in fraudulent schemes

November 25, 2021
SEC Pakistan brings reforms in voluntary pension system

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) on Wednesday introduced amendments to Voluntary Pension System (VPS) Rules, 2005 with the intention to bring reforms to facilitate greater pension penetration in the country.

The SEC Pakistan said that private pension funds established under the VPS Rules are professionally managed saving-cum-investment vehicles, that enabled salaried and self-employed Pakistanis (including non-resident Pakistanis) to contribute during their working life, to accumulate savings available after retirement.

The regulator said that the reforms while maintaining the flexibility of individualized asset allocation, have introduced a number of measures including easier transferability between pension fund managers and funds, added flexibility to fund managers to allocate various expenses within the total permissible expense limit allowing pledging of pension account against employer loan and removal of SECP’s prior approval for VPS advertisement.

Furthermore, in order to streamline adjustment in requirements over time, matters related to pricing, obligation, and performance of pension funds have been shifted from Voluntary Pension System Rules to the Non-Bank Finance Companies Regulations, 2008.

The SEC Pakistan said that the reforms constitute an important step forward in ensuring protection for the elderly while safeguarding its sustainability in the future.

It is expected that the revamped framework will not only pave the way for the growth of private pension funds, but also enhance financial inclusion and provide much needed dept to Pakistan’s capital markets.

SECP warns against investing in fraudulent schemes

September 9, 2021
SECP warns against investing in fraudulent schemes

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Thursday warned the general public against investing in any fraudulent investment schemes, which promise hefty profits and unrealistic incentives.

The SECP has been constantly clarifying that mere registration of a company, does not authorize it to solicit deposits from the general public or offer investment schemes.

It has been observed recently that a company namely “Econex Sales and Marketing (Private) Limited” is offering various packages to attract the public to its unlawful business activities of multi-level marketing (MLM) and referral marketing.

The said company is using its registration status with SECP to win public confidence, deceptively implying that such activities are being undertaken through SECP’s regulated platform.

As clearly provided in the explanation of section 301 of the Companies Act, 2017, raising unauthorized deposits from the general public, indulging in referral marketing, MLM, Pyramid, and Ponzi Schemes are unlawful activities in terms of explanation of section 301 of the Companies Act, 2017.

The SECP, in accordance with the provisions of the Companies Act, has initiated necessary legal action against M/s Econex Sales and Marketing (Private) Limited.

In view of the foregoing, the general public is hereby expressly advised in their own interest to be careful, not to invest their hard-earned money or indulge in illegal schemes launched by this company, actively being propagated through social media accounts and pages.

The same caution may be exercised in the case of any other company involved in any illegal deposit-taking, unauthorized investment, or MLM schemes.

Probe in Hascol financials underway: SECP

September 3, 2021
Date extended for implementing capital requirement

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) on Monday extended the implementation of liquid capital requirement on securities brokers up to September 01, 2021.

Pakistan Stock Exchange (PSX) in a notice said that the SECP had approved that the cutoff date for phased implementation of minimum of Liquid Capital (LC) and relevant ratios had been further extended till September 01, 2021. Securities brokers shall be required to maintain minimum LC effective from September 01, 2021.

Securities brokers shall submit to the securities exchange and the clearing house the audited financial statements disclosing the LC or submit reviewed half yearly LC statements, whichever is applicable, depending on the end of financial year, from cutoff date of June 30, 2021 onwards as par the regulatory requirements.

August 2, 2021
Probe in Hascol financials underway: SECP

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) took notice of HASCOL’s reported accounts for the period ending June 30, 2019 in October 2019, according to a statement issued on Tuesday.

In this regard, the SECP has diligently followed its requisite internal protocols in compliance with its mandated role and responsibility.

However, being the apex corporate regulator of the country, SECP has to conclude its proceedings after following due process as envisaged under the law.

The SECP does not comment on its regulatory actions until they are finalized and orders are issued, at which stage they are published on its website without any exception. However, recently some misreporting in the print media has been undertaken that is devoid of facts and has been published without seeking SECP’s version.

The SECP has been and continues to remain vigilant and proactive in swiftly dealing with any regulatory violations that fall within its ambit.

SECP greatly respects and values its ongoing relationship with the media which almost invariably reports on SECP’s activities in a measured, responsible and fair manner. However, it expects that reporting on matters currently under consideration of SECP should not be based on conjecture or incorrect hearsay.

July 13, 2021
Company registration rises to 145,913 by June 2021: SECP

ISLAMABAD: The total number of companies registered with the Securities and Exchange Commission of Pakistan (SECP) has increased to 145,913 by end June 2021, a statement said on Friday.

The commission registered 2,504 new companies in June 2021, indicating a growth of 63 per cent as compared to corresponding period last year.

Ninety-nine per cent of these were incorporated online and 45 per cent applicants were issued registration certificates the same day, whereas 203 new foreign users were registered from overseas.

Of the newly registered companies, 65 percent were registered as private limited companies, 31 percent as single member companies and four percent as public unlisted companies, not for profit associations, foreign companies and limited liability partnership (LLP). Total capitalization (paid-up-capital) of newly incorporated companies for the current month is amounted to Rs3.3 billion.

The construction & real estate sector took the lead with the incorporation of 474, trading with 382, I.T with 275, services with 216, ecommerce with 129, food & beverages with 105, textile with 86, corporate agricultural farming with 76, education with 66, engineering, and market & development 54 each, pharmaceutical with 50, healthcare with 45, tourism with 39, mining & quarrying, and transport with 36 each, chemical with 34, auto & allied with 33, cables & electric goods with 31, logging with 27, communication with 26, power generation with 24, paper & board, and cosmetics & toiletries with 19 each, steel & allied with 18, broadcasting & telecasting, and fuel and energy with 16 each, wood & wood products with 13 and 105 companies were registered in other sectors.

Foreign investment has been reported in 66 new companies. These companies have foreign investors from Austria, Azerbaijan, Bangladesh, China, France, Germany, Ghana, Hong Kong, Iran, Italy, Kyrgyzstan, Malawi, Mexico, the Netherlands, Nigeria, Oman, Philippines, Qatar, Russia, Singapore, Slovakia Republic, Sweden, Syria, Turkey, the UK, Uruguay and the US.

The highest numbers of companies, i.e. 810 were registered in Islamabad, followed by 807 and 394 companies registered in Lahore and Karachi respectively. The CROs in Peshawar, Multan, Faisalabad, Gilgit-Baltistan, Quetta and Sukkur registered 174, 127, 98, 62, 22, and 10 companies respectively.

July 10, 2021
SEC Pakistan imposes monetary penalty of Rs4bn on B4U Group for raising illegal deposits

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has imposed a heavy penalty of Rs4 billion on B4U group for raising deposits illegally and operating pyramid schemes.

In a tweet message on Sunday, the SECP said that it had concluded adjudication proceedings against B4U Group and its sponsors for raising illegal deposits from the public and operating pyramid schemes, in violation of the Companies Act, 2017.

The B4U Group comprises of 18 companies incorporated under the Act, as well as five unincorporated business setups. All the 18 companies were registered during the last two years. The main sponsor of B4U Group is Saif-ur-Rehman, along with his immediate family member.

The SEC Pakistan, after completing the due process of law, has disqualified the sponsors of B4U Group becoming a director of any company for a period of five years and has also imposed a penalty of Rs100 million on each of its sponsors. Further, the sponsors shall not be allowed to incorporate any new company under the Act.

“In addition the SECP has granted sanction for winding up of all 18 companies of B4U Group and imposed a penalty of Rs200 million on each company. Aggregate penalties amounting to Rs4 billion have been imposed on B4U Group.”

June 27, 2021

SECP proposes exemption of additional CGT on foreign investors

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has recommended exemption of additional capital gain tax (CGT) on disposal of shares in case of foreign investors, who are not on the Active Taxpayers List (ATL).

The SECP submitted tax proposals for budget 2021/2022 to the Federal Board of Revenue (FBR).

The SECP submitted following proposal in case of CGT:

Exempt foreign investors from applicability of 100 percent additional tax in case their name is not appearing in Active Taxpayers List (ATL) in the Tenth Schedule

Core objectives

Presently, 44 percent of total foreigners investing through PSX are currently not appearing in ATL list as a result of which they are subject to Capital Gain Tax (CGT) @ 30 percent.

For such investors who do not have any other source of income in Pakistan except capital gains, should not be subject to additional 100 percent tax for not being in the ATL

Align it simplified tax regime for Roshan Digital Account (RDA) holders, wherein tax rate applicable for persons appearing on ATL will be charged to RDA holders

Foreigners may be subject to taxation in their home country being resident tax payer therefore, a balanced taxation of their income in Pakistan is essential

Benefit to Economy

The rationale taxation of foreigner’s income from investment will result in inflow of foreign exchange, boosting foreign exchange reserves of the country.

Broaden investor base of capital markets and more liquidity to capital markets by luring foreign investors.

Impact on Tax Revenue

Foreigners represents approximately 5 percent of overall capital market investors trading and removing additional tax will not materially impact tax revenue.

Fresh investments will result in further tax revenue, in case tax incentives are provided.

Comparable regional practices relating to taxability

A brief overview of CGT practices adopted in other regions is provided below:

Country	Rate of CGT
Bangladesh	15 percent
India	10 percent – Long term 15 percent – Short term
Malaysia	Nil
Kyrgyzstan	CGT are subject to ordinary income tax rate at 10 percent
Nigeria	10 percent
Mauritius	Corporate: 15 percent if holding period is less than 6 months Individual: 10 percent if income is less than MUR 650,000 & 15 percent if income is more than MUR 650,000
Oman	Nil
UAE	Nil
Singapore	Nil

June 9, 2021

SECP suggests measures to document real estate sector

ISLAMABAD: Securities and Exchange Commission (SECP) has submitted its tax proposals for budget 2021/2022 for documenting real estate sector and promotion of Real Estate Investment Trusts (REITs).

The SECP submitted following suggestions for documenting real estate sector and promotion of REITs:

(i) Reduce tax on dividend from REITs from 25 percent to 15 percent to synchronize it with mutual funds [First schedule, Part-1, Division-III, paragraph B] of Income Tax Ordinance, 2001.

(ii) Exempt advance tax on property transfers to/from a REIT Scheme u/s 236C and 236K of Income Tax Ordinance, 2001.

(iii) Exemption for CGT provided in clause 99A, Part 1, 2nd schedule be applied to all categories of REITs (mix-use projects) without any sun-set clause

(a) Core objective of the proposals:

• To support government vision for development of housing sector and allied industries

• To promote regulated real-estate sector for promoting documentation and transparency

• To introduce level playing field for regulated sectors

• To remove disadvantage/dis-incentive caused to the REIT sector (Presently 1 licensed REITs, 4 REITs in pipeline and 9 RMCs registered)

• To increase overall tax revenue for FBR and provincial revenue authorities

(b) Direct and indirect impact on tax revenue (impact will be positive)

• Direct tax revenue for FBR increases; example – Tax revenue of Dolmen City REIT is highest tax being paid compared to any other Mall bigger or of same size. In addition, corporate tax from RMC;

• Encourages sector to grow thereby, fostering economic activity through allied industries resulting in higher tax collection;

• Transfer of properties to the REIT structure will also induce proportional tax collection of provincial/local revenue departments;

(c) Benefit for national economy

• Promoting economic activity through regulated, documented and transparent models and moving towards formal economy

• Level playing field for different investment avenues (collective pooled investments through REIT Fund)

• Investor participation in real estate sector with protection of interests under the REIT law vis-a-vis, falling prey to unregulated real estate sector mushrooming in the market

• Increase in revenue for the federal and local governments;

• Disclosure and taxation of property transactions at market value instead of DC rates

• Job creation related to construction, real estate and allied industries;

• Broaden the investor base and size of capital markets;

• Due to mandatory listing, small savers can share profits arising from real estate industry (which currently not available) – tax revenue from trading at stock exchange + CGT.

June 9, 2021