Corporate Law - Lecture 3 PDF

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! Corporate Law Lecture 4 The Securities and Exchange Commission of Pakistan

There are approximately 560 listed companies on the Pakistan Stock Exchange and over 60,000 companies registered with the SECP. The Companies Act, 2017 has attempted to find the right balance between ease of doing business and regulatory oversight.

Companies in Pakistan are registered under the Companies Act, 2017. The Securities and Exchange Commission of Pakistan is the regulatory body which regulates companies incorporated under the Act. The SECP has offices in all major cities of Pakistan, namely Lahore, Karachi, Islamabad, Multan, Sukkur, Faisalabad, Quetta, and Peshawar. The SECP was set up pursuant to the Securities and Exchange Commission of Pakistan Act, 1997. The SECP’s purpose is to develop a modern and efficient corporate sector, and a capital market based on sound regulatory principles, in order to foster growth and prosperity in Pakistan. The SECP was initially responsible for the regulation of corporate sector and capital market. However, over the course of last 20 years its mandate has been expanded to include supervision and regulation of insurance companies, non-banking finance companies, and private pensions. The SECP has also been entrusted with oversight of various external service providers to the corporate and financial sectors, including chartered accountants, credit rating agencies, corporate secretaries’ brokers surveyors etc. The SECP is a collegiate body with collective responsibility. The operational and executive authority of the SECP is vested in the chairman of the SECP who is also the Chief Executive Officer. The CEO is assisted by 4 commissioners, particularly to oversee the working of various operational units as may be determined by the CEO. The SECP is divided into the following five divisions:

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1. Company law division 2. Securities Market Division 3. Specialized Companies Division 4. Insurance Division Company law division 1. Corporatization and Compliance department a. This department is responsible for administration of the Act, and the rules and regulations made thereunder, along with other relevant laws. b. Its primary functions include registration of companies, regulating their statutory functions, and monitoring of corporate compliance through examination of statutory returns and accounts. c. These functions are performed by the 8 regional offices of the SECP called the Company Registration Offices (CROs). The department supervises, coordinates and monitors the working of the CROs. 2. Corporate Supervision Department a. This department is responsible for regulation and enforcement of companies listed on stock exchanges, public unlisted companies, private companies having paid-up capital of Rs 100 million and above and companies formed under S. 42 and 43 (double check as these were in the ordinance). Securities market division 1. The Securities Market Division (SMD) is responsible for monitoring, regulating, and developing the securities market. 2. This division has three departments a. Policy, Regulation and Development Department b. Licensing and Capital Issues Department c. Surveillance, Supervision and Enforcement Department

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! Specialized Companies Department 1. The SCD strives to provide a regulatory environment which is conducive for development and promotion of a robust Non-banking financial (NBF) sector 2. The major functions performed by SCD for the NBF sector include: licensing, registration, regulation, on-site inspection, off-site surveillance and enforcement. 3. For operational ease and enhanced efficiency, the SCD has been divided into two main departments: Policy, Regulation and Development Department (PRD) and Supervision and Enforcement Department (SED). Insurance Division 1. The SECP has been regulating the insurance industry since January 2001. 2. The SECP regulates and monitors the Insurance Sector in the country through powers vested in the Insurance Ordinance, 2000 and the Act. 3. Purpose of this division is to strengthen SECP’s role as an effective facilitator for sound development of the insurance and takaful industry and to achieve the underlying objective of raising the insurance penetration level, the following key areas have been in focus of SECP’s efforts: a. Protection of the interest of insurance policyholders. b. Amendments in the regulatory framework to strengthen SECP’s role as an apex insurance regulator. c. Insurance awareness programs d. Enhanced public image of the insurance industry. !

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