SECP issues Self-Regulatory Organisations (Registration) Regulations, 2022

ISLAMABAD: To promote the culture of self-regulatory organisations (SROs), the Securities and Exchange Commission of Pakistan (SECP) has issued the Self-Regulatory Organisations (Registration) Regulations, 2022 for the corporate sector.

These regulations will aide in corporate sector development, improved financial services and better protection for the interests of investors and other stakeholders.

SROs Regulations, 2022 provide a framework for registration of self-regulatory organisations (SROs), including specifying the form and manner of registration as an SRO under the SECP Act, 1997. They also specify minimum paid-up capital requirements for the companies desirous of registration as an SRO, along with the “fit and proper criteria” applicable on promoters, directors, chief executive and chairperson of board of directors of an SRO.

Self-regulation is an important globally practiced mechanism for encouraging industry participation to impose self-discipline. An SRO exercises certain level of authority over an industry and typically has some powers to create and enforce standards in an industry. They instill deeper acceptance of ethical behavior and principles as the rules are based on social norms and market conduct instead of a top-down regulatory approach.

In addition to the requirements provided in section 36F of the Act, a self-regulatory organisation shall prepare and maintain such books of accounts as required under the Companies Act, 2017 including records that shall depict a true and fair view of its state of affairs for the last ten years.

The SECP added that the self-regulatory organization shall submit its annual report to the Commission on effectively discharging its functions and responsibilities; collect admission and membership fees from its members for carrying out its functions and conduct screening and certification tests for its members, agents and such other persons as it may determine.

The self-regulatory organisation shall conduct training programmes for its members or agents and such other persons as it may determine, and also conduct awareness programmes for the participants of financial services markets or corporate sector; make endeavors for introduction of best business practices amongst its members; comply with the code of corporate governance applicable on the members of the sectors whose functions are being self-regulated by a self-regulatory organisation.

The self-regulatory organisation shall have in place proper systems and controls along with clearly documented policies and procedures reasonably designed for ensuring confidentiality of information in relation to its members, agents and such other persons as it may determine; discharge such other functions and obligations as may be specified by the Commission, from time to time; and ensure that it complies with the eligibility criteria at all times, the SECP added.

Copyright Business Recorder, 2022