Draft Companies Bill 2016 Up For Legislation
Drafted by: The Securities & Exchange Commission of Pakistan (SECP)
Status: Sent to the Ministry of Finance.
Summary: The Securities & Exchange Commission of Pakistan (SECP) forwarded the draft Companies Bill 2016 to the Ministry of Finance to initiate its legislative process in Parliament.
Under the new law, every officer of the company will be required to take necessary measures to prevent the commission of fraud and money laundering in their respective company. The SECP has also introduced provisions regarding certain specialized companies including free zone companies, real estate companies and agricultural promotion companies. The free zone companies will carry out business in export processing zones notified by the federal government in order to support Pakistan’s future export needs.
Currently, the export processing zones and free zones in Pakistan are notified by the federal government under the Export Processing Zone Authority Ordinance 1980 and various exemptions have been granted therein. Concessions will also be given with respect to filing requirements under the draft Bill. A concept of agricultural promotion company is being introduced to provide impetus and support to the rural economy and induce an increase in agricultural produce and its management.
Companies principally involved in real estate projects including development and construction of residential or commercial buildings and compounds will be required to take adequate measures to maintain escrow accounts and fulfill additional disclosure requirements to protect investors. Before taking advance from the general public, an NOC from the respective authorities shall be required along with a permission from SECP for advertising. It is conceived that in order to bring new real estate companies and promote the business, the proposed concepts will be shared with the Institute of Chartered Accountants of Pakistan, the Institute of Cost and Management Accountants of Pakistan, Federation of Pakistan Chambers of Commerce and Industry, other chambers of commerce and industry across Pakistan and leading corporate lawyers and consultants in the country.
Further changes to the draft Companies Bill 2016 will be finalized after taking into consideration the feedback received from the stakeholders and by holding a consultative session.
(Summary by Rohama Riaz)