Senate panel discusses definition of beneficial owner
A REUTERS FILE IMAGE
The Senate Standing Committee on Finance, Revenue and Economic Affairs met on Tuesday to discuss the Limited Liability Partnership (Amendment) Bill 2020 and the Companies (Amendment) Bill 2020.
Senator Musadik Malik briefed the meeting, chaired by Senator Farooq Hamid Naek, about the deliberations held by the Securities and Exchange Commission of Pakistan (SECP) regarding meaning of direct and indirect control and ultimate beneficial owner, as mentioned in both the bills.
Malik is also the convener of the sub-committee constituted on Monday.
The sub-committee was told that any person who directly or indirectly maintains 25% ownership of a company comes under the category of ultimate beneficial owner of the company.
The obligation of maintaining his name in the register falls on the company itself, otherwise penalties can be imposed.
Similarly, any person who has value shares or powers of appointment of board of directors (among other instruments) is considered to be exercising control over the company directly or indirectly, the sub-committee was told.
The sub-committee was also given an undertaking by the SECP that although the threshold of 25% is not mentioned in the law, it will be specified in the regulations made by the commission.
Similarly, an undertaking was given that the term ‘five years’ for maintaining records of companies in case of dissolution will be followed and will not be changed.
The standing committee observed that while the Companies (Amendment) Bill contained these definitions in the relevant section, the Limited Liability Partnership (Amendment) Bill did not.
Similarly, committee members discussed the efficacy of undertakings in comparison to actual amendments that can be brought and made part of the bill.
During the session, voting was held to decide whether amendments seeking further clarity about the definitions and specifying the percentage of ownership should be added to the bill or not.
Four members voted in favour of the amendments while three voted against them. Consequently, it was decided that amendments should be brought to the house.
The meeting was attended by Senator Sherry Rehman, Dilawar Khan, Zeeshan Khanzada, Imamuddin Shauqeen, Mohsin Aziz, Financial Action Task Force Pakistan director general, SECP chairman and SECP legal adviser.
Published in The Express Tribune, August 19th, 2020.
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