The Securities and Exchange Commission of Pakistan (SECP) has decided to replace the 27 year old Companies Ordinance 1984 with a new company’s law, as the existing law has become flawed and needed replacement with the new law to make it compatible with current circumstances and rules prevalent in the world. A 12 member team of Corporate Law Review Commission (CLRC) of SECP will draft new Companies Law and send it to Parliament by the end of next year, said Chairman SECP Muhammad Ali on Tuesday.
Briefing the media he said the new Companies Law would replace the 27 year old Companies Ordinance 1984. He said that the Companies Ordinance 1984 has become flawed and there is a need to make some amendments in it so that it becomes compatible with the current circumstances and rules prevalent in the world. Muhammad Ali said that Companies Laws prevalent in England, India and Australia would be consulted during the process and representatives as well as stakeholders would take part in the process. He said that in the new Companies Law small, medium and large companies will be dealt separately. He said that the work on new Companies Law was started in 2005 but it was not completed and now SECP has started working on it once again. He said that there are five hundred clauses that would be deliberated and amended one by one.
According to him the next meeting for consultation on the law will be scheduled on December 17. The securities Bill has detailed provisions dealing with securities exchanges, clearing houses and central depository which includes eligibility criteria for their registration, their duties, regulation making powers and accounts to be maintained by them. The Bill also includes licensing requirements, eligibility for licensing of market intermediaries including securities brokers, securities advisors, share registrar, and underwriters.
The enforcement powers of SECP includes, the power to call for information, inspection, public offer of securities, publication and contents of prospectus, criminal liability for defective prospectus, compensation for false or misleading prospectus and market offences which include insider trading, market manipulation etc and their penalties he said. Chairman SECP while answering the questions said that process of legislation in the Parliament is quiet long and needed to be speed up as four Acts sent by SECP have struck for last two years in Parliament for approval.