In pursuance of its mandate to encourage and promote investment, the Securities and Exchange Commission of Pakistan (SECP) has been working on an initiative to provide a one-window operation to foreign entities for obtaining security clearance certificate for incorporation in Pakistan.
In this regard, the SECP organized an important meeting on Monday with the concerned officials representing the ministry of interior, corporate sector and legal fraternity.
With Federal Interior Minister Abdul Rehman Malik in the chair, the meeting was attended among others by SECP Chairman Muhammad Ali and Commissioner Company Law Division Tahir Mahmood.
The participants compared notes on devising a mechanism for expeditious security clearance for foreign-funded businesses. They also discussed the resolution of cases pending for processing of security clearance of foreign investors at the earliest. Prominent business leaders who attended the meeting expressed their concern to the interior minister regarding the lengthy procedure for obtaining security clearance.
Currently, all foreign companies setting up businesses in Pakistan and foreign nationals interested in investing in local companies are required to obtain a security clearance (NoC) from the security agencies, which is a prerequisite before registration and acceptance of statutory returns.
Under the 1973 Rules of Business, the ministry of interior is primarily responsible for regulating entry and exit of foreigners; therefore, the SECP as a matter of policy forwards the cases to ministry of interior for security clearance.
Besides, it is also incumbent on foreign companies to obtain a prior NOC from the Board of Investment before starting their business activities.
The SECP in coordination with the interior ministry has been striving to streamline the process of obtaining security clearance and to remove unnecessary barriers in the way of foreign investment. The delay in security clearance is also exposed to public litigation and many complaints from the general public and chartered accountant firms have also been received.
The SECP believes that due to relatively lower domestic investment and resources, the Foreign Direct Investment (FDI) is critical to spurring country’s productivity and growth.
The encouragement of foreign investment in the country and development of corporate sector and capital market in Pakistan is possible only through coordinated efforts of all stakeholders.
To facilitate investors, the SECP chairman requested the interior ministry that the SECP may be allowed to proceed with incorporation of companies/registration of statutory returns having foreign investment/directors and appointment of foreign directors by making it mandatory to file all relevant documents necessary for security clearance along with an undertaking that in case of refusal of security clearance by the interior ministry, the relevant returns shall be de-registered forthwith and directorship cancelled.
