Corporate bill: lawyer identifies pitfalls, helps thwart passage

Chairman Senate Standing Committee on Finance Saleem Mandviwala was unable to ensure the passage of the ''Corporate Rehabilitation Bill 2015'' due to opposition of the committee members subsequent to a briefing on the drawbacks of the proposed law by lawyer Salman Akram Raja. A meeting of the committee took up the proposed law and Salman Akram Raja, who was invited to brief the committee on the ''Corporate Rehabilitation bill 2015'', said this would be single most important legislation in the corporate history of the country that would change the definition of the debtor and creditor. He continued that the proposed legislation would create a right for defaulters.
Raja said the legislation is a replica of chapter 11 of the US that gives right to the debtor to approach the court against creditor and the matter will become standstill as long as court decides it. He also stated that the UK and other countries have repeatedly rejected the chapter 11 on grounds that their judicial system are not so sophisticated to deal with this chapter. He said that the Chapter 11 is unique to the US corporate sector while companies in Pakistan are largely one-man shows and the law is therefore going to be misused. Moreover, he added, the country''s judicial system, which lingers on ordinary cases for ages, would be unable to deal with the court led process of Corporate Rehabilitation Plan. "The law creates a right for a defaulter," added Raja.
The Chairman of the committee wanted the passage of the proposed legislation but was compelled by committee members Mohsin Leghari, Mohsin Aziz and Saud Majeed who wanted an in-depth comparative discussion on the law before adopting it. "We do not want adoption of any law in haste," they added. A senior official of Finance Ministry informed the committee that the government intends to propose a new legislation on corporate rehabilitation soon after Finance Minister''s return from abroad.
However, Mandviwala stated the committee would not accept the government-proposed law if it does not accept the law proposed by the committee. Now the committee will take up the proposed law on May 10th meeting. The committee also directed the Federal Board of Revenue (FBR) to provide details about its letter to Singapore Authorities with respect to money transfer by Residentia Holding Company to London for the purchase of ''St James Hotel''; otherwise the committee would move a privilege motion against FBR.