SECP Appellate Bench dismisses SEPL's appeal against public sector classification

February 12, 2025 (MLN): The Appellate Bench of the Securities and Exchange Commission of Pakistan (SECP) has dismissed three appeals filed by Security Papers Limited (PSX: SEPL), National Investment Trust Limited (NITGETF), and Punjab Provincial Cooperative Bank Limited (PPCBL).

These appeals were filed against the order dated January 26, 2024, passed by the director of the Adjudication Division, SECP. 

The order was passed against SEPL, holding that SEPL is a Public Sector Company (PSC) due to its shareholding structure and government control, according to the press release issued.

As a result, SEPL was directed to comply with the requirements of Section 2(54) of the Companies Act, 2017, and the Public Sector Companies (Corporate Governance) Rules, 2013 (the PSC Rules).

SEPL had challenged the order on the grounds that being a publicly listed company it is not required to meet the legal and statutory requirements applicable to public sector companies.

NITGETF and PPCBL also filed appeals before the Appellate Bench, primarily on the grounds that they are neither owned nor controlled by the Federal or Provincial governments.

Therefore, the shareholding of both entities in SEPL cannot be considered as government holdings to declare SEPL as a PSC.

The shareholding structure of the SEPL reflects that it is a PSC as the majority shareholding is owned by the entities that are controlled or owned by the federal government/provincial government.

As a publicly listed PSC, the SEPL is not only required to meet the listing companies' requirements but it is also under the obligation to comply with all requirements applicable to PSCs.

In terms of entities with shareholding in SEPL, the Bench noted that NITGETF’s MD is a nominee of the federal government.

Furthermore, PRCL’s 79% shareholding is vested with the federal government and its entities and it is under the administrative control of the Federal Ministry of Commerce.

94.65% stake in PPCBL is held by the Government of Punjab through the Provincial Finance Department and SLIC is a state-owned and controlled company, and the appointment of SLIC’s incumbent chairman was made by the federal government on August 17, 2023.

The Bench has further noted that PSPCL is a wholly owned subsidiary of the State Bank of Pakistan.

The positions of its chairman and deputy chairman are designated to the governor and one of the deputy governors of the State Bank of Pakistan, appointed by the President of Pakistan (on recommendation from the Federal Government).

Therefore, it establishes that PSPCL is controlled by the federal government.

Based on the above, the Bench held that PSPCL, SLIC, NITGETF, PPCBL, and PRCL fall within the term “agency of the government or statutory body” and the shareholding of the aforementioned entities in SPL establishes that it is a PSC.

In view thereof, the Bench dismissed the appeals filed by SEPL, NITGETF and PPCBL.

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