Alvi okays amendments to facilitate start-ups
Changes in law will promote ease of doing business, encourage new firms
ISLAMABAD: President Arif Alvi has approved amendments to the Companies Act 2017 to provide an enabling regulatory framework to facilitate start-ups in Pakistan.
These amendments were proposed by the Securities and Exchange Commission of Pakistan (SECP) to help promote and nurture start-ups as well as attract local and international innovators.
The Companies Act 2017, promulgated on May 31, 2017, was reviewed by the SECP in consultation with various external and internal stakeholders including the Pakistan Business Council (PBC), Institute of Chartered Accountants Pakistan (ICAP), Institute of Cost and Management Accountants Pakistan (ICMAP), Overseas Investors Chambers of Commerce and Industry (OICCI), Pakistan Institute of Corporate Governance (PICG), etc. On the basis of feedback received during the consultation process, various amendments were proposed by the SECP to promote ease of doing business, encourage start-ups, improve the protection of minority shareholders and remove some anomalies noted in provisions of the Act.
These amendments have been enacted through the Companies (Amendment) Ordinance 2020, promulgated on April 30, 2020. In order to encourage start-ups, besides adding a definition of start-up companies, employees’ stock options and buyback of shares have been allowed to all companies while earlier those were allowed to public and listed companies only.
Financial inclusion - the need of the hour
These amendments will help address employee retention and reward issues, particularly faced by start-up companies. They will also facilitate start-ups, in case any founding member needs to exit the company.
The requirement relating to the payment of subscription money within 30 days of incorporation by the subscriber and filing of auditor certificate has been done away with to facilitate small companies.
Now, a listed company may hold an extraordinary general meeting at shorter notice with approval of the commission. Furthermore, all companies are required to file annual returns with the registrar irrespective of the paid-up capital. CEO will now be appointed by the board of directors in all companies.
Procedure for the handling of unclaimed dividends has also been revised. Now, an unpaid dividend account will be maintained by companies and any mark-up accrued on such account will be used by companies for corporate social responsibility (CSR) initiatives.
Published in The Express Tribune, May 5th, 2020.
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