SECP issues draft of Companies (Amendment) Ordinance, 2020

The Securities and Exchange Commission of Pakistan (SECP) Thursday issued draft of the Companies (Amendment) Ordinance, 2020, containing new measures for greater ease of doing business for corporate sector.

In this regard, the legal amendments have been proposed in the Companies Act, 2017 for consultation.

Under the draft amendments in the Companies Act, 2017, the SECP has introduced a provision relating to the measures for greater ease of doing business.

Under the Companies (Amendment) Ordinance, 2020, the Commission may implement measures for providing greater ease of doing business, improving regulatory quality and efficiency and facilitating innovation and the use of technology in conducting business by the corporate sector, including but not limited to formalizing existing practices through regulations and implementing other measures for attaining international standards of regulatory quality and efficiency for greater ease of doing business.

The SECP may specify modes and procedures for enabling greater ease of entry into and exit from the market to start-up companies.

The Commission may implement measures for constituting special task groups from the corporate sector for encouraging the use of financial technology in the conduct of business and creating environments for testing and examining the impact of innovation, new processes or technologies outside the existing regulatory framework including but not limited to crowd funding, digital assets, Open APIs, Smart Contracts, Cloud based solutions and allowing the establishment and use of regulatory sandboxes.

The Commission may implement measures for encouraging the use of technology for providing and meeting regulatory reporting requirements, risk assessment, customer due diligence, the issuance of suspicious transaction reports, keeping records and such other requirements as may be specified to meet anti-money laundering and counter-terrorism financing standards.

The Commission may implement measures for improving regulatory compliance and specifying proportionate data driven standards for the corporate sector to take measures for cyber security, data sovereignty and algorithm supervision and specifying exemptions and incentives under the prevailing laws with the object of fostering innovation, promoting start-ups and entrepreneurship ecosystem in line with international best practices.

The SECP may enforce measures for improving regulatory monitoring, reporting, and compliance requirements and prescribing such other frameworks as may be notified by the Commission for stimulating innovation and financial inclusion in the conduct of business by the corporate sector through the use of financial technology, regulatory technology and supervisory technology.

Provided that the Commission may take such other measures prior to the issuance of regulations as it may deems fit through guidelines, policy papers, frameworks or any other modes or mechanisms, SECP added.

Under the new provision of employees' stock options, a company may issue shares in accordance with its articles under such employees' stock option as may be approved by the Commission and in accordance with such procedure and subject to such conditions as may be specified: Provided that requirement of approval of Commission under this section shall not be applicable to start-up companies or any other class or classes of companies as may be notified.