In order to ensure the timely completion of much-awaited review of country's existing corporate law, Chairman, Securities and Exchange Commission of Pakistan (SECP), Muhammad Ali has established a dedicated secretariat with a sole objective of drafting a new corporate law.
According to Imran Ghaznavi, Head of Media and Corporate Communication Department, SECP, here on Saturday, the new corporate law would serve as a specially tailored solution to the specific needs of Pakistan's corporate sector and cater to the aspirations of entrepreneurs and investors alike.
The secretariat, located at the SECP's headquarters, will work closely in co-ordination with the Corporate Law Review Commission (CLRC), formed in 2005 under the chair of former justice Ajmal Mian to undertake a review of corporate law. It is pertinent to mention here that the CLRC had lost the initial momentum due to various extraneous reasons but the current SECP Chairman Muhammad Ali, having recognised the extreme importance of this monumental task, has rejuvenated the project.
The Chairman SECP believes that at the heart of any economy lies a solid, flexible and enabling company law and it is the foremost priority of the SECP to maintain a framework that is modern, competitive and forward-looking - one which facilitates enterprise and ensures transparency.
A dedicated team of legal and technical resources has been brought in to work on the project boasting a range of foreign qualifications and intensive experience in legislative drafting as well as specialist knowledge of company law administration. Consultative and planning meetings with the members of the CLRC had been held at every stage and the Commission had determined challenging yet realistic deadlines to achieve this momentous goal, SECP spokesperson said. Imran Ghaznavi said the Corporate Law Review Commission had been engaged in depth research into various international corporate law models of economic significance and renown such as the US State of Delaware - home of more than 60 percent of Fortune 500 companies, the recent Companies Act 2006 of the United Kingdom, the new Indian Draft Bill and the corporate law regimes in most major trading hubs in the Asia-Pacific region including Australia, New Zealand, Hong Kong, Malaysia and Singapore. A meticulous and extensive comparative analysis of these models has been undertaken in order to identify and study key innovations and their utility for increasing capitalisation and liberalising the market.
Building upon feedback from the extensive public consultation carried out previously, the new secretariat has been tasked to slew of material produced by the Commission. The Secretariat will co-ordinate with CLRC, gathered the feedback from stakeholders and finalised the draft of new corporate law.
The defining theme of this revamp is two-fold - the SECP envisions a law that is accessible and streamlined, with a focus on making the setting up of a company and starting business as convenient and small investor-friendly as possible without sacrificing on the flexibility and sophistication demanded by larger corporations. The goal is to have a smooth, efficient, speedy process that will encourage small business owners to incorporate and help them utilise the advantages of formal organisation and to lay down a scheme of regulation that is fair, open and transparent in order to build a culture of trust and integrity in the market.
A robust and flexible mechanism for shareholder participation is aimed for that will stimulate small investors into taking a pro-active role in management as well as implementing more rationalised financial and audit requirements for smaller and family owned businesses while enforcing an international standard of reporting for larger corporations. The SECP strongly believes in a tailored approach as opposed to simply following any one jurisdiction as has been the historic practice. To this end, the SECP is considering new, more flexible and more facilitative forms of business vehicles and means of providing competitive tools for capitalisation and market participation. The SECP was also considering Islamic forms of business and investment models - all with the aim of providing a well thought out framework that is specifically tailored to the particular demands and aspirations of the market, Imran Ghaznavi added.
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