Mandatory: Senate panel approves audit of privatised companies

Gives green light to amendments in Privatisation Ordinance.

ISLAMABAD: The Senate Standing Committee on Finance on Tuesday unanimously approved amendments to the Privatisation Ordinance, which will make it binding for the Privatisation Commission (PC) members to disclose conflict of interest and seek post-audit of privatised entities.

The amendments were proposed by Senator Sughra Imam of the Pakistan Peoples’ Party, aimed at ensuring transparency in the government’s privatisation agenda and making sure that the stated objectives were achieved. The PC did not oppose the amendments.

Headed by Senator Nasreen Jalil of the MQM, the senate panel cleared certain clauses of the private-member bill, which will now be tabled in the upper house of parliament for voting. Pakistan is probably the only country where the issues of conflict of interest and post-audit of privatised companies are not addressed, said Imam.

She said due to the absence of post-audit clause in the Privatisation Ordinance, the allegations of favouritism and foul play in the MCB Bank privatisation were still not addressed.

The privatisation of over three dozen state-owned entities, including divestment of shares in profitable companies, remains the hallmark of the PML-N government’s economic programme. There are apprehensions that the government wants to favour certain individuals, however, the PC denies the allegations.

Securities Bill

The standing committee also discussed the draft Securities Bill 2015. The bill was moved by the Ministry of Finance to implement a condition of the International Monetary Fund, which is pushing for an early approval of the bill.

The committee discussed the amendments proposed by the MQM in the draft bill. The government has proposed that it should be binding for a listed company to respond promptly to any news appeared in print and electronic media regarding the company, which may affect the opinion of an investor or public.

The MQM wanted the government to withdraw the proposal, but the Securities and Exchange Commission of Pakistan (SECP) and other committee members did not agree. The listed company will also be liable to report any unusual activity to the SECP that could affect the price or volumes of trading on the stock exchange.

Through the bill, the government also wants to empower the SECP so that it can ask any securities exchange company for compulsory listing on the stock exchange.

SECP officials said similar powers were available under the 1969 SECP Ordinance but they were never used by the commission. They also opposed a proposal of the MQM senator regarding increase in the minimum paid-up capital for granting licence to a securities and exchange company from Rs500 million to Rs1 billion. The SECP argued that the Rs500-million limit will be net of losses and the company has to maintain it at all times.

It also proposed the establishment of a special licensing regime by repealing the existing registration process.

It will also be binding on the directors, members and employees of the securities exchange company to disclose conflict of interest.

The government has also proposed stringent regulations for the public offering of securities. No person will make a public offer of securities if such person or its substantial shareholders have been declared defaulters or expelled by a stock exchange or its Trading Right Entitlement (TRE) certificate has been cancelled, according to the proposed bill.

Published in The Express Tribune, February 25^th,  2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.