Oversight board will be set up for monitoring audit of companies. PHOTO: FILE
“The bill will facilitate control over capital and financial services markets, corporate sector and insurance industry, bringing the Securities and Exchange Commission of Pakistan (SECP) on a par with its international counterparts in capital markets of the world,” the SECP said in a statement on Thursday.
The new law is aimed at addressing shortcomings in the existing law. The commission succeeded the Corporate Law Authority in 1999 as a unified regulator of the capital markets and for control of corporate entities. However, its mandate continued to enhance through various amendments, such as management and regulation of modarabas (1999), insurance sector (2000), non-banking financial companies sector (2002), commodity futures market (2003), real estate investment trusts (2008), etc.
“The law will meet local and international requirements for the corporate sector regulator, including requirements of the International Organisation of Securities Commissions,” the SECP said.
The SECP (Amendment) Bill 2016 provides that the commission will be administratively, financially and functionally independent and the federal government will promote, enhance and maintain independence of the commission.
Furthermore, the vacancy in the commission and its policy board will be filled within 120 days. The number of private members in the policy board will be increased from four to six. The commission will be able to constitute committees, task force and consultative groups to assist in the performance of its functions.
The functions of the commission have been enhanced to include regulation and facilitating growth of Shariah-compliant financial products and healthy growth of the corporate sector (public and private).
It will also promote good corporate governance; promote, encourage and enforce proper conduct, competence and integrity of regulated persons; create awareness amongst investors and provide protection to them; ensure development of a sound regulatory framework to counter illegal and unfair practices in the financial services market; control and minimise market abuse, misconduct and financial crimes in the financial services market and other sectors regulated by the commission.
To ensure the quality of audit of companies and provide for an effective mechanism, the amendment bill envisages the establishment of an independent Audit Oversight Board.
The bill is aimed at providing detailed provisions about prosecution of offences by the commission and powers pertaining to inspection, investigation, enforcement and call for information have been enhanced.
Published in The Express Tribune, July 22nd, 2016.
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