The Securities and Exchange Commission of Pakistan (SECP) has facilitated companies by removing difficulties arising out of provisions of Section 208 related to investment in associated companies and undertakings of the Companies Ordinance, 1984.
Private companies requested relaxations
A statement issued by SECP said various private companies had requested for the relaxation from the requirements of Section 208 as they raise capital through private placement of equity and bank financing and that most such companies are small family-owned entities.
Changes to take effect after official gazette
Securities and Exchange Commission of Pakistan therefore felt that compliance with Section 208 is cumbersome for private limited companies and has exempted the private companies, which are not subsidiaries of a public company from the requirements of the Section 208.
Investment companies given greater freedom
The 2008 Notified Entities Regulations clearly provide limitations for investment, including investment in companies in which the directors of asset management firms have an interest. The SECP has relaxed investment made by companies in accordance with its investment policy.
Soliciting shareholder approval condition removed
Another significant issue addressed by the SECP is that soliciting shareholder’ approval before making routine deposits with associated financial institutions duly licensed by the SBP, an NBFC duly licensed by the SECP and the Modaraba Management Company is a cumbersome exercise for companies.
Interest left to companies’ discretion
Earlier, SECP though its notifications had granted exemption to class of companies from the requirement of Section 208 (1) to the extent of obtaining the authority of special resolution only. Various queries have been received from corporate sector with regard to charging return on investment in the form of loan.
