SECP issues Licensed Persons (Obligation under Voluntary Winding up) Regulations, 2016

The Securities and Exchange Commission of Pakistan (SECP) has notified that no court may entertain an application for winding up filed by a licensed person unless such application is accompanied by certification (NOC) from the SECP. In this regard, the SECP has issued Licensed Persons (Obligation under Voluntary Winding up) Regulations, 2016 here on Friday.
The regulations said that these regulations shall prescribe how a licenced person will satisfy the Commission about settlement of investor claims before filing winding up petition under Companies Ordinance, 1984. It said that a licensed person may apply to the Commission in Form-"A" for its prior approval to file a petition for its winding up in terms of clause (a) of sub-section (2) of Section 148 of the Act.
If such a licensed person is a TRE certificate holder of a securities exchange, the application, shall be accompanied by the following information and documents: Certified copy of resolution passed by the board of directors of the licensed person for filing the winding up petition, an affidavit on non-judicial stamp paper from the chief executive officer of the licensed person that no default proceedings are pending against the licensed person and that there are no outstanding customer claims and complaints, a clearance certificate from the securities exchange confirming that no customer claims and complaints are pending against the licensed person, a clearance certificate from the clearing house confirming that as a clearing member, the licensed person has fully discharged its obligations, and a clearance certificate from the central depository confirming that as its participant, the licensed person has fully discharged its obligations.
In case such licensed person is not a TRE certificate holder of a securities exchange(s), the application, shall be accompanied by the following information and documents: Certified copy of resolution passed by the board of directors of the licensed person for filing the winding up petition, and an affidavit on non-judicial stamp paper from the chief executive officer of the licensed person that no claims and complaints of customers are pending against the licensed person.
The Commission, while considering the application under regulation 3, shall inter alia take into account that the information and document, as the case may be, have been provided, status of compliance of the licensed person under the Act and any rules and regulations made there under or any directions, codes or guidelines issued under the Act; that all the claims and complaints of customers against the licensed person have been resolved and/or settled.
Explanation: The term "settled" shall mean and include that the customers of a licenced person has either willingly withdrawn their claims and complaints in writing or due payment of claims have been made to them or securities have been delivered to them, which may be ascertainable from the books and records of such licensed person or any other record maintained by the securities exchange, clearing house, central depository or the Commission, the SECP said.
The licensed person has provided complete records of dealing with customers to such customers, the securities exchange or to the Commission, it said. In case of a TRE certificate holder, the licensed person has facilitated the transfer of all funds and securities pertaining to its customers as per wishes of such customers or as per direction issued by the securities exchange or the Commission, and that no claims and complaints of customers remain unsettled or unresolved at time of seeking permission for filing its winding up petition, any other matter relating to protection of interest of the customers and/or general public, it said.
In order to satisfy itself, the Commission may inspect the books and records of the licensed person and may also verify genuineness of claims and complaints of customers and their settlement in any of the following manners by ordering to conduct an independent enquiry/investigation by the officers of the Commission or any person or entity authorized by the Commission in this regard, or by appointing an independent firm of chartered accountants, the cost of which shall be borne by the licensed person, or by any other manner considered appropriate by the Commission.
The Commission, after conducting such inquiries and after obtaining such further information as it deems appropriate, and upon being satisfied that the licensed person is in compliance with the provisions of the Act and these regulations, and it is in the interest of customers and general public and may grant approval to the application made under regulation (3) subject to any additional condition imposed by the Commission.
The SECP said that a licensed person shall ensure that it has invited and settled all claims of customers before filing a petition for winding up. A TRE certificate holder shall immediately notify the Commission, securities exchange, central depository company and the clearing house when it passes a resolution for winding up. The securities exchange shall, on receipt of the resolution or as soon as it becomes aware of passing the resolution for winding up of a TRE certificate holder, suspend the trading facilities of such TRE certificate holder with immediate effect.
The central depository shall, on receipt of the resolution or as soon as it becomes aware of passing the resolution for winding up of a TRE certificate holder, immediately freeze all sub-accounts under the control of such TRE certificate holder as a participant and its House account. Movement of securities from the sub-account and House account shall only be allowed to facilitate the movement of securities by the customers and satisfaction of customer claims as per the default regulations of the securities exchange and the central depository.
Where a securities exchange, clearing house or depository company becomes aware of facts which lead them to believe that any licenced person is not discharging its obligations towards its customers in timely manner, it shall immediately notify the same to the Commission, it said.
In case of TRE certificate holder, the securities exchange, in addition to inviting claims through publication of a notice in two widely circulated newspapers, shall invite claims from and/or inform all customers of a TRE certificate holder in a manner as may be specified in the default regulations of securities exchange. In case of default of TRE certificate holder who is participant of a central depository, the central depository in addition to regular circulation of notices, shall also send notices to all sub-account holders of such TRE certificate holder for transferring out of securities so that such accounts can be closed, it added.