In order to increase the rate of regulatory compliance, the Securities and Exchange Commission of Pakistan has made annual on-site inspection mandatory for all licensed entities including the brokerage houses.
The SECP claimed that strong regulatory environment based on international best practices is essential for the development of a modern corporate sector in Pakistan. Therefore, to ensure the compliance of all rules and regulations by licensed entities the SECP has decides to conduct the annual onsite inspection and in this regard the SECP’s will increase its enforcement capacity by 200%. The enforcement departments will be trained and equipped with latest and effective tools of auditing.
Beside annual on-site inspection of all licensed entities, quarterly offsite monitoring will also be conducted. This will increase transparency, investor confidence and foreign portfolio investment.
The companies, that will refuse annual inspection to SECP’s enforcement team, will be imposed with heavy penalty and suspension of the licenses wherever applicable in the law. The maximum penalty for specialized companies including assets management companies, leasing firms, housing finance services, real estate investment funds, mutual funds and pension schemes for the refusal of inspection is up to Rs 50 million as well as cancellation and /or suspension of the license. The maximum penalty for the brokerage houses, credit rating agencies, depository companies and clearing companies is up to Rs 100,000 and Rs1 million for insurance companies.
In the past the SECP took action against defaulters by filing criminal complaints and sometimes referring those cases to the NAB. However, in order to ensure compliance with all the relevant statutory requirements, it is necessary that offsite monitoring and onsite inspections should be regularly conducted for all licenses/licensed entities.
In order to have effective enforcement and to adopt the best international practices, the SECP has decided that the following divisions/departments will conduct offsite monitoring once in each quarter and onsite inspection once in a year of each of their following licensee/ licensed entities as a policy with effect from July 1, 2013.
The maximum penalty for the refusal of inspection is up to Rs 50 million as well as cancellation and /or suspension of the license.
The scope of items j and k to be limited to the law being administered the SECP.
The maximum penalty for the refusal of inspection is up to Rs 100,000 as well as cancellation and /or suspension of the license. The maximum penalty for the refusal of inspection is up to Rs 1 million.
