The Securities and Exchange Commission of Pakistan (SECP) will only allow those promoters/sponsors of the valuers, directors and chief executive of valuers (companies) to render services for valuation, whose names are appearing on the Active Taxpayers List (ATL) of the Federal Board of Revenue (FBR).
Under the Valuers Registration and Governance Regulations, 2017 issued by the FBR here on Tuesday, the SECP has issued fit and proper criteria for sponsors, directors and chief executive of the valuer. The person should be a taxpayer and his name should be borne on the Active Taxpayers List regularly published by the FBR, the SECP regulations said.
According to the regulations, all persons subject to fit and proper criteria shall report any change with reference to their fitness and propriety and information submitted earlier to the respective valuer within three working days of such change taking effect and the chief executive of the valuer shall within a period of seven working days from the date of receipt, report the same to the Commission.
The valuer shall monitor whether any change in the status of its chief executive and directors is contrary to the requirements of the fit and proper criteria. In case of any change in status result in non-compliance with the fit and proper criteria, the valuer shall immediately stop the person from performing his assigned functions and inform the Commission.
He shall simultaneously initiate the process for replacement of the individual meeting the fit and proper criteria, the SECP said. Any violations or circumvention of the fit and proper criteria shall be dealt with under the relevant provisions of the valuers Registration and Governance Regulations, 2017 (the "Regulations"), SECP said.
Eligibility of any person desiring to act as a director on the board of directors of a valuer, excluding sponsors of the applicant, shall be judged on the basis of following criteria, which, in the case of directors, shall be in addition to meeting requirements of the Companies Act, 2017 (the "Companies Act"), relating to eligibility of a director. Provided further that in case the sponsor and major shareholder is a body corporate, in addition to the relevant/ applicable clauses, corporate behavior of the said body corporate and its sponsors shall be duly considered at the time of scrutiny of application for registration.
The SECP said that the person should not have been adjudged as an insolvent or he should not have suspended payment of debts or compounded liabilities with his creditors. The person should not have been convicted by a court of competent jurisdiction as a defaulter in payment of any loan (in excess of Rs 500,000) to a financial institution including banking company, a Development Financial Institution or a Non-Banking Financial Company.
The person, in his individual capacity or as director of a company, has not been in default of payment of dues owed to any, financial institution, or securities exchange, commodity exchange, clearing house, central depository and / or defaulted in payment of any taxes in the individual capacity or as a proprietary concern or any partnership firm or as director in any private unlisted and listed company.
The person should not have been a director and/or chief executive of any company or body corporate which has defaulted in payment of Government duties/ taxes/ cess. Qualification and Experience: The person must be fully conversant with the duties of director as the case may be, as prescribed under the statutes, rules and regulations, memorandum and articles of association and the code of corporate governance for listed companies.
The Chief Executive of a valuer must hold at least a Masters' degree or equivalent qualification with post qualification experience of 10 years with at least five years in a senior management position (or bachelor's degree with 15 years post-qualification experience) in business administration, accounting, finance, commerce, economics, valuation or information technology, statistics; mathematics, or graduation in engineering from any university duly recognized by the Higher Education Commission of Pakistan.
The Chief Executive of the valuer must have demonstrated, through his qualification and experience, the capacity to successfully undertake the cognate responsibilities of the position. The SECP said that Membership or registration of the person or any company in which he was a director during the last three years has not been suspended / cancelled by the Commission, any other regulatory authority, any professional body, association or relevant entity. Provided that eligibility of a person may be considered on the basis of prior clearance obtained from any such organization that suspended/ cancelled the membership or registration.
The person should not been disqualified/ removed from the post of a key executive position of a company by the Commission or any other regulatory authority.
Integrity, Honesty and Reputation: The person should not have been convicted in any criminal offence or directly involved in any settlement in civil/ criminal proceedings in a court of law, particularly with regard to moral turpitude, investments, financial/business misconduct, fraud/forgery, breach of trust, financial crime etc. and/or it has not been concluded by any regulatory authority that he has been associated with any unauthorized financial activity.
No investigation/enquiry, conducted under Section 139 of the Securities Act, 2015, Section 29 of the Securities and Exchange Commission of Pakistan Act, 1997, Section 21 of the Securities and Exchange Ordinance, 1969, Section 256 or Section 257 of the Companies Act has been concluded against him by the Commission with adverse findings, or penalty of Rs 500,000 or more has not been imposed on him by the Commission in the last three years, in respect of any laws administered by the Commission. Provided that a person may be considered eligible in case a period of at least three years from the date of expiry of the period specified in the order for which such person has been restrained/prohibited/debarred has elapsed.
The person should not have provided false or misleading information either to the Commission or to any of the regulatory body, securities exchange, central depository or a clearing house. The person should not have been actively involved in the management of a company whose registration or license has been revoked or cancelled or which has gone into liquidation or other similar proceedings due to financial irregularities or malpractices.
The person must not be ineligible, under the Companies Act; or any other legislation from acting as a director. The person should not have entered into a plea bargain arrangement with the National Accountability Bureau, the SECP said.
(e) Conflict of interest: he directors of a valuer shall not hold a similar position in any other valuers Company in a similar business in Pakistan.
Further, a key executive shall not hold directorship in his or her personal capacity in a business concern which is also a client of the valuer, the SECP added.
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