Fit and proper criteria: SECP nod mandatory before appointment of directors

The Securities and Exchange Commission of Pakistan (SECP) will make mandatory for securities exchange, clearing house and central depository to obtain clearance from the commission, on the fit and proper of the directors prior to their appointment or election, on the board of directors. The SECP has issued SRO 292 (I)/2020 here on Wednesday to issue draft amendments to the Central Depositories (Licensing and Operations) Regulations, 2016.

The SECP has also proposed amendments to the Securities Exchanges (Licensing and Operations) Regulations, 2016 through an SRO 294 (I)/2020 issued on Wednesday.

The securities exchange shall obtain clearance from the commission on the fit and propriety of the directors prior to their appointment or election, as the case may be, on the board of directors of the securities exchange and shall submit confirmation that it has evaluated the persons against the fit and proper criteria as provided under these regulations and has no adverse findings therein.

Moreover, a securities exchange shall, with approval of its board of directors, constitute a regulatory affairs committee comprising of at least three independent directors and one shareholder director.

According to the SECP, the central depository shall obtain clearance from the commission on the fit and propriety of the directors prior to their appointment or election, as the case may be, on the board of directors of the central depository and shall submit confirmation that it has evaluated the persons against the fit and proper criteria as provided under these regulations and has no adverse findings therein.

Under the revised regulations, at least one independent director shall be present in the meeting of board of directors of the central depository to constitute the quorum.

Provided that this condition shall not be applicable in the case of first meeting of the board of directors after the election of directors in which the names of the independent directors are to be finalised for submission to the commission.

The compliance officer shall submit a comprehensive report on quarterly basis to the board of directors and the commission regarding matters reported during the respective quarter, the corrective actions taken and their status "and shall submit such additional reports to the commission as may be specified," the SECP added.

Under revised Clearing Houses (Licensing and Operations) Regulations, 2016, the clearing house shall obtain clearance from the commission on the fit and propriety of the directors prior to their appointment or election, as the case may be, on the board of directors of the clearing house and shall submit confirmation that it has evaluated the persons against the fit and proper criteria as provided under these regulations and has no adverse findings therein."