ISLAMABAD: The Pakistan Tehreek-e-Insaf government has promulgated a Presidential Ordinance to clear those people who have entered into plea bargain with the National Accountability Bureau (NAB) for their appointment as directors of private as well as government companies.
Prime Minister Imran Khan’s government had promulgated the Presidential Ordinance last week to amend various sections of the Companies Act, 2017, one of which is Section 172 that had barred such people from becoming directors.
The government has also abolished the two per cent quota of people with disabilities in companies.
However, the amendments in the companies act have opened another Pandora’s Box, as a change in Section 282 has threatened the Rs300 billion privatisation transaction of two-LNG fired power plants.
The sources said that the government was in the process of promulgating yet another Presidential Ordinance to reverse the amendment in Section 282.
The PTI government promulgated the Presidential Ordinance a week before the National Assembly was going to meet. But these changes have raised serious questions about the motives of the government, as in yet another person-specific amendment in Section 181, the government has paved the way for appointment of an influential person on a government-owned company’s board.
Ironically, these legal amendments were introduced to provide an enabling environment to business startups.
“President Dr Arif Alvi has approved amendments in Companies Act, 2017 to provide an enabling regulatory framework to facilitate startups in Pakistan,” according to the Securities and Exchange Commission of Pakistan (SECP).
These amendments were proposed by the SECP to help promote and nurture startups as well as attract local and international innovators, it added.
The last PML-N government had enacted the Companies Act, 2017 by repealing the Companies Ordinance, 1984.
In the 2017 act, Section 172 had been inserted to lay out disqualification conditions against a person to hold the office of a director of a company for a period of up to five years beginning from the date of order.
The sub-section M of Section 172 stated, “The person has entered a plea bargain arrangement with NAB or any other regulatory body”, which the PTI government had deleted last week.
The government has also deleted Section 181 of the 2017 act that had placed certain obligations on independent and non-executive directors of the companies.
The deleted section stated that “an independent director; and (b) a non-executive director; shall be held liable, only in respect of such acts of omission or commission by a listed company or a public sector company which had occurred with his knowledge, attributable through board processes, and with his consent or connivance or where he had not acted diligently”.
The finance ministry sources said that this has been done to pave the way for appointment of a person on the board of the Petroleum Institute of Pakistan. The SECP was not issuing fit and proper certificate to the proposed nominee due to his role as director on the board of another company.
By amending Section 186 of the 2017 act, the powers of the federal government to appoint first chief executive officer of a public sector company have also been abolished.
A major amendment, which has the potential to unravel next budget’s targets, is made in Section 282 of the act. The government has empowered the courts to take a decision about merger or demerger of the companies by withdrawing the SECP’s powers.
This has hurt the ongoing privatisation transaction of two LNG-fired power plants. The government wants to sell two power plants either to one or more than one investors, depending upon the bids it receives during the auction process.
The Haveli Bahadur Shah and Baloki power plants are owned by the National Power Parks Management Company Limited (NPPMCL). In case the government receives two separate bids, it will have to break the company into two and after last week’s ordinance, only the court can complete the demerger process.
The sources said that this was not a well-thought out amendment, which has now threatened the transaction valuing up to Rs300 billion by the PTI government.
The finance ministry has directed the SECP to prepare another ordinance to undo the legal amendment, the sources said.
The privatisation ministry said on Tuesday that despite the lockdown situation, transactional activities continued through technological means and prequalified bidders for NPPMCL remained engaged and were provided necessary information and assistance in completion of the buyer side’s due diligence.
The government has also deleted Section 459 of the act that had guaranteed a quota for persons with disabilities in the public interest companies.
“Every public interest company, employing one hundred or more employees shall ensure special quota for employment of persons with disabilities of two per cent or such higher percentage as may be specified or required under the applicable federal and provincial law,” according to the deleted section.