The sub-committee of the National Assembly Standing Committee on Finance was submitted a brief of draft Companies Bill 2017. The Finance Division (Investment Wing) has submitted the brief to the committee, which started clause-by-clause discussion on the proposed bill for the third consecutive day. Now, the committee would resume reading on January 17, 2017 of comprehensive law.
The officials of the SECP informed the sub-committee that in order to ensure adequate measures against fraud, money laundering and terror financing, necessary provisions have been proposed over powers of the Commission to investigate including joint investigation. Furthermore, provisions requiring officers of a company to take adequate measures to curb such violations have also been proposed.
The draft bill inter alia contains provisions including; simplifying the procedure for incorporation of companies, enabling maximum use of technology, conversion of physical shares into book-entry form in unlisted companies, encouraging paperless environment at all levels, relaxations to small and medium enterprises, Shariah certifications of companies, requirements for real estate companies for providing enhanced protection to the investor, protection to independent and non-executive directors to encourage inclusion in the board, manner of selection and maintenance of databank of independent directors, relaxations for free zone companies, registration of agricultural promotion companies for the development of agricultural sector, establishment of Investor Education and Awareness Fund, registration of valuers, resolution of disputes through mediation and conciliation panel, passing of members' resolution through circulation, simplified provisions for expeditious merger and acquisition, maximum disclosures by Pakistanis to the local regulatory authorities in respect of investment in foreign companies and facilitation and regulation of public sector companies.
The SECP officials said the corporate sector in Pakistan is presently regulated under the Companies Ordinance, 1984 (XLVII of 1984) hereinafter referred to as "Ordinance", which is basically meant to regulate the companies and certain other associations for the purposes of healthy growth of corporate enterprises, protection of investors and creditors and promotion of investment. Previously, amendments in Ordinance were made in piecemeal and were narrowly focused resulting in disconnect and overlap in regulatory framework and there is a dire need to review and revamp the thirty-two years old legislation to provide competitive legal framework for the corporate sector in Pakistan.
The draft Companies Bill 2017 ("the draft Bill") intends to replace the Ordinance in order to consolidate and amend the laws relating to companies so as to encourage and promote corporatisation in Pakistan based on best international practices and to ensure maximum participation of members in the decision-making process of the company through use of modern electronic means of communication. Further, it also aims to address the issues relating to protection of interests of minority shareholders and creditors.
The draft bill will facilitate the growth of economy, in general, and the corporate sector, in particular, by providing simplified procedure for ease of starting and doing business, greater protection of investors and augment corporatisation in the country, the SECP officials added.