ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has decided to introduce legislation to control any manipulation in the price of the Modaraba certificates by the Modaraba companies.
Sources told Business Recorder that the SECP will introduce legislation through the proposed Modaraba Companies and Modaraba (Establishment and Control) Ordinance. Presently, the said sector is governed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance 1980.
The SECP has also proposed empowerment of the certificate holders by allowing voluntary change of a Modaraba company on the application of the certificate holders.
In this connection, a new provision (voluntary change of Modaraba company) has been proposed to be added in the revised law.
“If an application is made by a Modaraba company, in a manner as may be specified for voluntary change of a Modaraba company, the Registrar may by an order appoint another Modaraba company to manage the Modaraba subject to such terms and conditions as may be specified,” the SECP stated.
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According to the proposed provision, the SECP has placed a condition on the minimum holding by the Modaraba Company. “To control manipulation in the price of the Modaraba certificates, if any, held by the outgoing Modaraba company,” the provisions added.
The outgoing Modaraba company shall not divest its Modaraba certificates to the extent of minimum holding till such time as may be specified. The incoming Modaraba company shall acquire minimum holding of Modaraba certificates as required, it added.
The enabling provision would also bring investment in the Modaraba by the incoming Modaraba company to the extent of statutory holding as prescribed, the sources added.
Copyright Business Recorder, 2022
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