It is indeed a favourable development that further improvement in corporate regulation is on the list of priorities before the government. The Securities and Exchange Commission of Pakistan has announced that plans are afoot to replace the Companies Ordinance of 1984 with a new legislation. This is an auspicious step to bring corporate regulation in line with developments with some other parts of the world.
The development of corporate regulation has had a chequered history. It was in the late fifties that a commission was set up to draft a new company law for Pakistan. It is unfortunate that no definite proposals were framed and for the next two decades no advancement could be made in this field. However, setting up and establishing Securities and Exchange Authority of Pakistan in 1969 was a significant step in beginning to update the necessary legislation that should have been put in place much earlier. It was with great difficulty that the managing agencies system put in place during the colonial era was finally brought to an end. If appropriate corporate regulation had been brought soon after independence the founding of businesses and corporate expansion would have achieved an even more stupendous growth in those years. Our neighbouring country had brought new company legislation by the year 1956. The task of making of a new law for the companies in Pakistan began in real earnest in the year 1980.
In these modern times the regulation of economic matters has assumed significance nearly equivalent to the palpable presence of that of a workable constitution and a constitutional government running sagaciously the affairs of the state. A successful economy is just as much a sine qua non for a state to advance ahead where it endeavours to ensure a better future for the people. This is not possible without a dynamic corporate economy functioning and thriving in the marketplace. We need to remember that regulation of any phenomenon or for that matter of any system is invariably directed towards making the system run smoothly and definitely more efficiently. In the present exercise to replace the old regulation with a new and more efficient regulation, it is not only required but desirable that different stake holders be taken on board.
As a democratic government is in place in the country, an interaction with and within the parliament can be smoothly followed and pursued. The regulation of companies listed on the stock exchange and the menace of insider trading needs to be curbed and taken care of in a more meaningful way. Similarly, it is necessary that superfluous and unnecessary controls should be brought down, so that an efficient and developing market economy may flourish. It is rightly proposed that regulation of small and medium sized companies should not only be separated but simplified. Even small businesses are now following the habit of forming companies. The regulation should ensure that they are not burdened with large overheads. A small business enterprise can not afford large organisational and related expenses. These measures shall go a long way for the small and medium sized businesses to flourish and make a valuable contribution in to the national economy. Dealing with stock exchanges, clearing houses and central depositories shall become effective and go a long way in stabilising the economy.
The writer has served as consultant to the United Nations and other developing economies on the issue of trade and development and can be reached at [email protected]
