SECP approves vital regulations for capital market and corporate governance

The Securities and Exchange Commission of Pakistan (SECP) in its Commission meeting has passed regulations concerning capital market, insurance and corporate governance.

The Commission has approved the proposed amendments to the Motor Vehicles Act, 1939, which will be disseminated via the SECP's website after consultations with the stakeholders, including IAP, non-life insurers and insurance brokers.

The Commission also approved publication of the draft General Takaful Accounting Regulations, 2018, to elicit public opinion. These draft regulations have been formulated in exercise of the powers conferred under Rule 29 of the Takaful Rules, 2012, read with sub-section (1) and (2) of section 46 read with section 167(3) of the Insurance Ordinance, 2000. These regulations provide the principles based on which accounting and reporting of general takaful business of general takaful operators and window general takaful operators shall be made.

The Commission deliberated in detailed on the segregation of non-core functions of CDC in light of the Central Depository (Licensing & Operations) Regulations, 2016, and approved the amendments to Regulation 5(1)(l) of CDC Regulations to remove the restriction on CDC to segregate its non-core businesses which are not incidental to its functions.

The Commission has also issued a direction to CDC to carve out the function of Share Registrar Services being offered by CDC through a separate subsidiary only on account of a statutory requirement of Section 65(2) of the Securities Act, 2015.

In addition, the Commission also approved the Foreign Companies Regulations, 2017, which primarily cover the areas pertaining to name reservation of foreign companies, registration of certain documents of foreign companies, registration of changes in documents or details concerning foreign companies, provisions regarding accounts/financial statements, registers, mortgage and charges of foreign companies, etc.

The procedure and filing requirements for registration of documents of a foreign company have been amended suitably and provision of issuance of certificate of registration of documents has been added with clarity.

Moreover, the registration of alteration in documents or details of foreign company have been simplified and only one form has been specified for any alteration in any documents and other details of a foreign company while provisions relating to filing of accounts by foreign companies have been amended to bring the same in line with the provisions of the Act.

In addition, procedure of certification of documents and translation of documents required to be filed by a foreign company has been provided; available modes of payment of fee to the SECP have been specifically stated, i.e. through credit card or debit card or other mode of online payment or through challan in the designated branch of the bank and provision regarding penalty to be imposed in case of violation of any provision of the regulations has been added.

Lastly, the Commission also unanimously approved for publishing the draft amendments to the Real Estate Investment Trust Regulations, 2015, in the official gazette for eliciting public opinion. These regulations intend to introduce changes in the regulatory regime for Real Estate Investment Trusts (REIT) for promoting investment in real estate through capital market.

The amendments to the regulations have been proposed on the basis of feedback received from all the stakeholders, including a REIT management company, Mutual Funds Association of Pakistan, Central Depository Company, lawyers and valuers. It may be recalled that the regulatory framework for REITs was introduced in 2008.

However, the framework was revised in 2010 to encourage launch of REIT schemes. In spite of these improvements, only one REIT scheme was launched because, among other factors, the requirements for setting up a REIT scheme were considered stringent by the industry.

The proposed amendments will reduce the requirements of approval from the SECP and enhance the role and responsibility of RMC and trustees. For comments, the draft regulations will soon be placed on the SECP’s website.