Companies Ordinance, 2016

The cat is out. With the passage of time; laws, particularly fiscal laws, unfold litters. Normally, the law is smoothed by issue of SROs, governmental circulars and of course by courts' pronouncements. A new law is put in place when the existing law renders itself unworkable. One is simply flabbergasted by down pour of Companies Ordinance - 2016 on the statutes book.
Although text of the old law was no blockade in flow of funds for business or the exchequer, not cause for a dissension - intra or inter federating units of the country or on being a riddle in doing some good. The new Companies Law has surfaced by way of an Ordinance.
There has been no serious voice for putting in place a new company law. Does jump in of the new law anything to do with a 'mapping; not possible under the old law frame? The new law seeks to do many things, not tasted good by certain sections of professionals. It is also due to certain upsets eg omissions and commissions in the new law now in terms of not precisely providing qualification of an auditor for a company with capital of under Rs 3 million. It enables all sorts of riff-raffs to do audit. It does not care of the catastrophe that an auditor just with a few months accounting education will "usher".
Will it be ok if an Intermediate Commerce or an MBA does auditing of a company? How do you stop him? Although not mandatory for him, he cannot understand or decode IFRS or read the Company Law.
The new law has little on the ground with reference to governance of companies. It does not have an acceptable or desired ado with corporate governance. The subject appears to have been consigned to stock exchange which itself is based on some quickly framed regulations. Such an approach also offends the dictum that framers of law, the regulators and its practitioners should be separate, notwithstanding that the framers are always required to have ears for practitioners.
By not providing qualification for auditors of all companies, it is putting audit on waves anchoring near and far off-shores. A motive for the hurry in bringing the new law apparently is to hit a branch of accountants. A tip taking rounds, although not worth giving much attention to, is that both Chairman SECP and Finance Minister belong to a different specie of accountants, looking down all others worthy of the say.
Reported is scores of meeting SECP had with reference to the issue of corporate governance. Some of the men attending these report that certain agreements reached have not found place in the law. It is reported that for the sake of confidentially, no minutes of these meetings were recorded. However, tape recording of the meetings with SECP will bear testimony. The present law does not have anything for the profession of secretaryship, ie, the Institute of Corporate Secretaries (ICSP), providing for growth to the company secretary's profession. Are the framers of corporate laws not aware of the role company secretaries play in the corporate culture. They appear oblivious to growth of Company Secretaries profession in India and the UK, etc.
The (now) Institute of Public Finance Accountants (PIPFA) was set-up through joining hands of ICAP, ICMAP and the Auditor General of Pakistan who took the decision to have a widely respected accountant as its first head. PIPFA was put in his hands, in preference over the Auditor General or a Deputy Auditor General.
As reported earlier PIPFA's first President was named by the then Auditor General, despite the Auditor's General's Office on its Management Board. For the last over 20 years, its contribution to "visualize" is not seen. It can really work and raise productivity of the Government Audit Offices, now often acting as bulls in the China shop. It does not have name as a professional body. This could have been done by a provision in the company law to raise status of its graduates.
Can the Pakistan Institute of Corporate Governance (PICG) fill the gap, with the (love) activity of indirectly collecting fat money, through lending its name to all sorts of institutions for the sake of fruits as against imparting knowledge the corporate professional should have. Well if it is dreamed that PICG would eventually have it, we have institutions like ICAP, ICMAP, ICSP and PIPFA, each with governmental hand in their management. A question can be. Why PICG? Probably because members of the stock exchange want it to have as a cover.
To bring the new company law by way and Companies Ordinance can be to quell appraisal of the statute by public representatives in the assembly. As of now, the legislators and professionals will not allow it go as draft law is. The non-catered holes in, would not be easy to fill. The Ordinance may not major as a baby of the SECP. I can hear sound of the horseshoes to play differently when it comes before the parliament.
I have seen your editorial of 18 November. All I can say is that your summations with reference to the new law are 'wishes'. You need institutions, wherewithal for growth in your sphere. SECP's 2016 Ordinance does not do that. It is not to be put in place by persons from the heaven who are supposed to make no mistakes. SECP needs to reckon that initial draft of the 1984 law had over 100 lacking. These were filled basically by (late) Akbar Merchant, (late) Adam Patel and (late) Hyder Bhimji. Fortification to this end was by Ebrahim Sidat & Masoud Naqvi. They live to certify this. It will be in addition to the record SECP may have.