SECP imposes fines of up to 5 billion rupees on 22 companies for fraud


ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has imposed penalties of up to 5 billion rupees on companies involved in fraudulent activities, in addition to prohibiting their sponsors from becoming directors of any other company or incorporate a new company, during the previous financial year (fiscal year 21).

The SECP strengthened its enforcement regime and authorized liquidation proceedings against 22 companies during the year, according to the regulator’s 2020-21 annual report, published on Saturday.

SECP President Aamir Khan highlighted in the report that the main focus of the year was the need for accountability and transparency.

SECP has centralized its oversight function and strengthened its litigation team to enhance SECP’s ability to function as a focused, transparent and accountable regulator.

“While for the current fiscal year SECP will move more towards a function-based structure, SECP will centralize its licensing function,” Mr. Khan said.

He added that the primary focus will remain on the continuous improvement of the enforcement regime through the development of the workforce, the use of technology and the strengthening of the litigation function.

The annual report covers reforms undertaken with the aim of ensuring effective enforcement, improving access to finance, encouraging capital formation, simplifying regulatory processes and reducing the cost of doing business.

In FY21, the regulator focused on ensuring consistent, more transparent, and focused regulatory oversight across all sectors.

The SECP created a centralized oversight division to adopt an integrated enforcement strategy and uniform decision-making.

While Assessors from the Asia Pacific Group (APG) of the FATF found Pakistan to be largely compliant with all relevant SECP 54 MER 2019 Recommended Actions.

To improve access to finance for SMEs and start-ups, the SECP has notified amendments to the Companies (Subsequent Issuance of Shares) Regulations to allow private companies to raise capital by receiving real estate, intangible assets and services of potential investors.

To promote investment in the real estate sector through real estate investment trusts (REITs), the SECP revamped the regulatory framework for REITs and introduced a new public-private partnership (P3) model.

The major overhaul led to the approval of FPI’s first Sharia-compliant development program. In addition, during the year, approvals were granted to three housing finance companies; two investment finance services and a microfinance services company.

In November 2020, SECP registered Pakistan’s first Collateral Management Company (CMC), which will provide storage and custody services for a range of agricultural commodities. CMCs issue Electronic Warehouse Receipts (EWRs) against goods. EWR can be traded electronically and used to obtain loans from banks.

The SECP has also implemented several reforms for the development of the capital market and broadened the investor base.

Market-related reforms included the introduction of a framework for corporate debt and government debt securities; the introduction of the concept of direct listing on the PSX to facilitate the listing of public companies; regulatory frameworks for debt and hybrid ETFs; and the introduction of “90-day deliverable forward contracts”.

Posted in Dawn, May 22, 2022


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