ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has initiated re-drafting of the Companies Ordinance 1984 to make it compatible with the best global practices, and to finalise it in the next 12 to 18 months for the growth of the corporate sector of the country.
Source told Business Recorder here on Saturday that the Commission is in the process of drafting new Companies Ordinance, under the guidance of the Corporate Law Review Commission. The new law would be finalised within next 12 to 18 months so that global regulatory regime should prevail in the corporate sector of Pakistan.
Sources categorically dispelled the impression of abolishing legal division from the Commission, adding that the Commission has restructured its Legal Division.
The Commission has started working on new Companies Ordinance. The existing law for companies in Pakistan is Companies Ordinance which was promulgated in 1984. The SECP has started drafting new law, keeping in view the demand of the entire corporate sector. The existing company law will be revisited in the line with the best global practices. It is expected that after introduction of revised law model, corporatisation in Pakistan would be encouraged, sources opined.
They said that recently a new securities law for the growth of the capital market of Pakistan has been drafted by adopting international best practices. Likewise, a new 'Futures Trading Act' has also been drafted by the SECP. Under the new set-up of the SECP, the Commission has restructured the Legal Division to improve its performance.
About restructuring of the Legal Division, sources said that the Law Division was responsible for three jobs-Legislation, Advisory and Litigation. Out of the said three areas, Legislation is the most important area which needs to be focused on by the Commission for drafting new law. The concerned division has to simultaneously focus on all three areas of Legislation, Advisory and Litigation. All the three functions could not be properly handled by one division .The SECP restructured the department because operation of the division did not have internal legal resource because of which they were facing problems in routine matters.
Sources said that opinion was sought on real issues from the legal department which was one of the main reasons for pendency during last few months. The SECP is in the process of creating a dedicated Secretariat under its Legislation and General Council Department (GCD) for the purpose of updating company's law in Pakistan, sources added.
The Corporate Laws Review Commission will also be reconstituted in near future to ensure that revised law can be introduced with the support of proper Secretariat in place.
Under the new structure, matters pertaining to litigation will be looked after by legal resources, posted to different divisions and departments of the commission. This move was made on the request of Operating Department.
The specialised advisory and legislative functions are still centralised and are being performed by the Legislation and General Council Department (GCD) under the direct supervision of the Chairman of SECP.
However, the GCD has been entrusted with creating and maintaining panel of lawyers for litigation purpose from which Operating Department will appoint lawyers. There will be an indirect check by the Legislation and GCD through the list of lawyers maintained by it.
The litigation has been decentralised. The Legislation and GCD will now focus on specialised advisory and legislative issues for the Commission. It is expected that this move would allow the new department to focus more on product development of the capital market and corporate sector of Pakistan so that both sectors can grow and contribute to the overall economic growth of the country, sources added.