For the past one year, in order to streamline the process of security screening of the directors of foreign companies registered in Pakistan, the SECP has made it mandatory for directors of companies which existed before 2011 to sign the affidavit that they will resign in case their security clearance is rejected.
In such a situation, the company will be bound to find a suitable replacement.
In 2011, the Interior Ministry directed the Securities and Exchange Commission of Pakistan (SECP) to forward all the relevant documents of the foreign directors of a new foreign company trying to register in Pakistan for security clearance before registering it. The process of giving security clearance to companies usually takes around three months, sometimes more, and has been a huge hurdle in attracting Foreign Direct Investment (FDI).
These measures were taken in the wake of cases like Raymond Davis in order to scrutinise foreigners coming into the country on various pretexts and carrying out activities that are detrimental to the security of the country.
However, in order to facilitate FDI, the SECP issued a press release in March 2013 in which it said that the security clearance of directors is not a prerequisite for company registration. Nevertheless, foreign directors of a new company would have to sign an affidavit which said that they would resign.
This allowed the companies to commence their business operations immediately since the registration was allowed while the Interior Ministry looked into the directors’ information and issued a security clearance in due time.
Similarly, if a foreign company wishes to open a branch office in Pakistan but not register itself, it would have to go through the same process but through the Board of Investment and not SECP.
This move has allowed the foreign investment to grow since the initial waiting period of three months has been removed.
However, the directors of some of the foreign companies which existed in the country before 2001 have yet to go through security clearance and the SECP has been trying to complete the screenings for the last one year.
According to an official at the SECP, this will facilitate the government in implementing the National Action Plan and will enable the agencies to document individuals who were not given a security clearance earlier.