Foreign companies incorporated: Companies Ordinance empowers SECP to seek details of owners

The newly-promulgated Companies Ordinance, 2016 has empowered the Securities and Exchange Commission of Pakistan (SECP) to seek details of beneficial owners of foreign companies incorporated in Pakistan. It is learnt that a new section 452 (Companies' Global Registrar of Beneficial Ownership) has been incorporated in the Companies Ordinance, 2016.
According to the new section in the Companies Ordinance, every substantial shareholder or officer of a company incorporated, having ten percent or more shares in a foreign company or body corporate, shall report to the company regarding his beneficial ownership or any other percentage or interest as may be notified by the Commission, on a specified from within thirty days of holding such a position or interest.
The company shall submit all the aforesaid information received by it during the year to the registrar along with the annual return. Any investment in securities or other interest as may be notified by a company incorporated under this Ordinance, in a foreign company or body corporate, shall also be reported to the registrar along with the annual return.
All the said information shall be reported to the registrar through a special return on a specified from within sixty days from the commencement of the new Companies Ordinance 2016 and thereafter. Any contravention or default in complying with the requirements of this section shall be an offence liable to a fine of level-1 on the standard scale.
The Commission shall keep record of the information in a Companies' Global Registrar of Beneficial Ownership, the SECP's new provision added. According to the sources, the recently promulgated Ordinance would allow SECP to check details of owners and investors not only of a local company but also of any foreign company registered within Pakistan. Previously, the law does not allow the regulator to inquire about the owners of a foreign company in the country.
The previous law did not require any disclosures with regard to foreign investments made by the directors in their personal capacity; therefore, the SECP has introduced special provisions in the Companies Ordinance 2016, pertaining to maintenance of record of foreign investment in shape of Companies' Global Register of Beneficial Ownership. In order to ensure corporate transparency and facilitate meaningful due diligence, the SECP proposes to maintain a Companies' Global Register of officers and beneficial owners of the companies having beneficial ownership in local or foreign companies. The information will be reported by the company to the registrar along with the annual return of the company; however for the first time, such information will be reported through a special return on a prescribed form within a stipulated timeframe, they added.