The government has decided in principle to bring the non banking financial companies including development financial institutions (DFIs) under the regulatory ambit of the Securities and Exchange Commission of Pakistan (SECP). An official source said that the decision in this regard made at the meeting of the
SECP Policy Board chaired by Finance Secretary Waqar Masood Khan and attended by SECP Chairman Muhammad Ali, State Bank of Pakistan Deputy Governor Yaseen Anwar, Additional Secretary Ministry of Commerce Kamran Ali Qureshi and Senior Joint Secretary Ministry of Law Baqar Ali Rana. The meeting noted that the time was ripe for bringing the DFIs within the regulatory ambit of the SECP. However, the policy decision on the subject would be conveyed to the Commission after necessary consultation with the Governor State Bank of Pakistan (SBP).
According to the minutes of the meeting, a copy of which is available to Pakistan Today indicates that the Executive Director (Law) briefly the Board about the background and process involved in the finalisation of the draft Securities and Exchange Commission of Pakistan Act.
He also gave a presentation and highlighted amendments which were suggested by the Commission after necessary discussions with the legal consultant of the Finance Division and the Senior Legislative Adviser, Ministry of Law, Justice and Parliamentary Affairs. After detailed discussion on the provisions contained in various sections, the amendments were suggested by the Board. The draft law was approved by the Commission, the Policy Board as well as being vetted by the Law Division. Besides, revision of the SECP Act being a conditionality of the ADB’s Loan needs to be complied with. The existing law has been reviewed once again and we are at a stage to conclude this process.
Another issue with regard to appointment of directors and CEOs of the insurance companies was also raised by the Additional Secretary, Commerce. Chairman, SECP informed the Board that a ‘fit and proper criteria’ is being developed by the Commission which shall also contain a condition of seeking prior approval of the Commission before appointing a director or CEO of an Insurer. It was desired that the Commission should make suitable amendments in the Insurance Rules and the same may be submitted to the Board for its approval up to June 30, 2011 positively.
After a thorough deliberation on various provisions of the draft law, the final draft of the Securities and Exchange Commission of Pakistan Act was approved. Consequential amendments in the ‘HR Handbook’ of the Commission were also approved by the Commission. The salient features of the draft bill, available with Pakistan Today, the General Powers of the commission will allow the Commission may sue and be sued; acquire, hold and dispose of property of any description; enter into contracts or other agreements; receive and pay money; impose fines and penalties as provided under this Act or any Administered Legislation. It may print or publish material, including codes, guidelines, prudential requirements, opinions or regulatory and policy statements, by way of providing information to regulated persons, investors and the general public in the manner which it deems appropriate. In addition, the Commission may take whatever lawful action it can take and do all things that are necessary for, or incidental or conducive to, the achievement of its regulatory objectives and the performance of its functions and duties under this Act or any Administered Legislation.
The Commission shall consist of such number of Commissioners as may be fixed by the Federal Government but such number shall not be less than five or more than seven, including the chairman. The Commissioners shall be appointed by the Federal Government from amongst persons of established integrity, competence and recognition with experience of not less than 20 years in any of the disciplines of the law, accountancy, finance; insurance, economics, investment management, industry, banking or similar disciplines.
A person shall not be appointed as Commissioner, if he is more than sixty-two years of age at the time of his appointment, provided that a Commissioner may be re-appointed for a subsequent term if he is not more than sixty three years of age at the time of his re-appointment. If he holds a post in the Service of Pakistan; or if he holds a political office or is an office bearer of a political party; The term of office of a Commissioner shall be three years from the date of his appointment and no person shall be appointed for more than three terms. Notwithstanding any other provision of this Act, a Commissioner or Chairman shall retire and cease to hold office on attaining the age of sixty five years; and subject to sub-section of section 8, no person shall be appointed or shall continue to serve as Commissioner or Chairman for a total cumulative period of more than nine years. No act, decision or proceeding of the Commission shall be invalid by reason of an existence of a vacancy in, or defect in the constitution of the Commission. Subject to the provisions of section 9, the Commissioners and Chairman shall have security of tenure for the duration of their term of office.