The Securities and Exchange Commission of Pakistan (Regulations and Enforcement) Bill 2011 would empower the SECP to establish Securities and Exchange Tribunals to deal with the civil and criminal cases of corporate sector and introduce provisions for alternate settlement of disputes/liabilities of undertakings, enhancing the enforcement powers of the commission.
The salient features of the Securities and Exchange Commission of Pakistan (Regulations and Enforcement) Bill 2011 have been submitted by the SECP before the National Assembly Standing Committee of Finance headed by MNA Fauzia Wahab here on Wednesday. According to the key features of the Bill, (Regulations and Enforcement) Bill 2011 would provide a policy statement that the powers of the SECP provided under the Bill 2011 will not affect the powers of the State Bank of Pakistan.
At present, the SECP Act 1997 did not complement the complete overhaul of the mandate of the Commission such as inability of the Commission to act as an integrated regulator and inability to act promptly. This issue was also highlighted in various assessment reports by international donor and law enforcing agencies including United States Securities and Exchange Commission.
The major deficiencies in the SECP Act 1997 included inability of the Commission to act as an integrated regulator in view of the enhanced mandate; inadequacy of enforcement powers; lack of disciplinary process for regulated entities; absence of independent judicial forum; absence of alternative dispute resolution mechanism and lack of adequate powers to recovers dues and penalties. Following are the salient features of the SECP (Enforcement and Regulation) Bill submitted to the National Assembly Standing Committee of Finance:
The Bill consists of 12 Parts and three Schedules, which are:
Part I Preliminary:
This Part deals with the commencement and applicability of the draft Bill and contains the definitions of the terms used therein. Part II Powers and Functions of the Securities and Exchange Commission of Pakistan: This Part provides for the powers, functions and regulatory objectives of the Commission. This Part contains provisions relating to the appointment of the Chairman, Commissioners, Secretary to the Commission and employees of the Commission including advisers and consultants and their terms and conditions of appointment. This Part also covers the manner in which the Commission will conduct its affairs including provisions related to delegation of powers, maintenance of Fund and expenditure to be charged on the fund, accounts, audit and provisions related to budget and annual report.
Part III Securities and Exchange Policy Board:
This Part provides for constitution of the Policy Board, its powers and functions and the manner in which it will conduct its business.
Part IV Disclosure of Interest and Confidentiality:
This Part contains detailed provisions related to the duty of the Chairman, Commissioners and other employees of the Commission to disclose any conflict of interest which may hinder them in performance of their duties in accordance with the Bill. The Part provides for the manner in which the interest is to be disclosed and penal provision for failure to disclose conflict of interest. This Part also provides for the duty on the Chairman, Commissioners and other employees of the Commission to maintain confidentiality and penalty on account of disclosure of confidential information.
Part V Immunity: This Part provides for immunity to the Chairman, Commissioners and other employees of the Commission from any legal proceedings or suit for damages as a result of any action or omission in exercise of performance of powers and functions under the Bill.
Part VI Supervision and Investigation: This Part deals with the supervision and investigation powers of the Commission. It empowers the Commission to call for information, conduct inspections and investigations and outlines the powers of the investigator in relation to investigations. This Part also makes destruction and falsification of any document and carrying regulated activity without a license an offence.
Part VII Powers of intervention by the Commission: This Part empowers the Commission to intervene in the activities of the regulated persons if it appears to the Commission that it is in the interest of the investors or public. Under this Part the Commission may restrict a regulated person from business or prohibit a regulated person from disposing of his property or maintain property of such value as appears to the Commission to be desirable with a view to ensure that the regulated person will be able to meet his liabilities in respect of the regulated activity. The Commission will have the power to issue directions to the regulated person to achieve the ends of the Bill.
Part VIII Discipline of Regulated Persons: This Part provides for the power of the Commission to discipline the Regulated Persons by cancellation and suspension of license and registration. This Part provides for the manner and procedure for the exercise of the power by the Commission.
Part IX Self Regulatory Organisations: This Part deals with the registration of self-regulatory organisations including manner of application for registrations and the powers of the Commission to inspect their records and impose sanction for contravention of the Bill.
Part X Securities and Exchange Tribunal: This Part provides for the establishment of Securities and Exchange Tribunal, which will be a judicial forum vested with the civil and criminal jurisdiction and will be under judicial as well as administrative control of the High Court. This Part provides for the qualification, terms and conditions of appointment, composition and manner of appointment of the members of the Securities and Exchange Tribunal. This Part also provides for the powers and function, jurisdiction, procedure to be adopted and forum of appeal from the orders of the Tribunal. This Part also provides for the administrative working of the Securities and Exchange Tribunal including provisions related to appointment of the Registrar and budget etc.
Part XI Miscellaneous: This Part provides for provisions relating to alternate settlement of disputes, provision related to settlement of liabilities including power to seek enforceable undertaking, consent orders and plea bargain, provisions regarding punishment of repeat offenders, provisions related to recovery of penalties and adjudication of fines and penalties, provisions related to enforcement of orders of the Commission, and provisions related to protection of whistle blower. This Part also provide for the powers of the Commission to prosecute and initiate prosecution, power to make regulations and issue guidelines and policy statements etc.
Part XII Repeals and Related Provisions: The Part contains provisions related to repeal, savings and transition. This Part also provides for a policy statement that the Powers of the Commission provided under the Bill will not affect the powers of State Bank of Pakistan.
First Schedule: The First Schedule provides for a list of laws administered by the Commission.
Second Schedule: The Second Schedule provides for the repeal and the extent of repeal.
Third Schedule: Part I of the Third Schedule provides for savings and transitional provisions. The Part II of the Third Schedule contains consequential and other amendments as a consequence of the enactment of the bill, SECP's Bill 2011 added.