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Corporate Growth
During FY 2009-10, 3,041 companies were registered. Total numbers of registered companies as on 30.06.2010 were 56,120.

Year Wise Incorporation of Companies
The year-wise incorporation of companies for last five years is reflected below:

Province Wise Distribution of Companies
Province wise distribution of total registration as on 30.06.2010 is reflected in the graph below:

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Total Number of Registered Companies:
NUMBER & TYPE OF COMPANIES
(Registered under the Companies Ordinance, 1984)

Of these 3,041 new incorporation during the FY 2009-10, 1,179 companies were incorporated through online system, accounting to 39 % of the new incorporation. This shows the increasing acceptance/ adaptability level by the general public towards eServices.

Capitalization Breakdown:
CAPITALIZATION BREAKDOWN AS ON 30-06-2010

Sector- Wise Classification:
SECTOR-WISE DISTRIBUTION (Limited by Shares)

Association not-for-profit under Section 42, Companies Limited by Guarantee under Section 43 and Trade Organizations
Presently, there are 723 associations not-for-profit, companies limited by guarantee and trade organizations working in various fields such as commerce, art, science, religion, sports, social services and charity. During FY 2009-10, 28 new associations not-for-profit, companies limited by guarantee and trade organizations were registered.

Foreign Companies:

Foreign companies that are incorporated outside Pakistan and have established a place of business in Pakistan are contributing a lot towards the development of country’s economy. At the end of the FY, 783 foreign companies were operating in the country. During the FY 2009-10, 14 foreign companies were registered. Country Wise break up of foreign companies is shown below:

Foreign Companies

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Performance Overview

With the view to encourage shift to the documented sector and to ensure continuous development of companies, the Commission achieved some notable targets during the FY 2009-10. Particularly, focus remained in the areas of enabling an electronic submission environment in various functions and making eServices a success, developing the legal framework to meet new demands of regulation, and also ensuring statutory corporate compliance with legal and regulatory requirements through creating awareness as well as enforcing regulatory actions.

Key Achievements

eServices Project:

In order to further facilitate companies in the eServices regime, the following activities have been undertaken:

• Electronic Inspection of Records
  To facilitate the public in inspecting the records/documents submitted by the companies, the facility for electronic inspection of records has been provided at the Company Registration Offices (CROs). Presently, this facility includes documents which are filed online. However, efforts are being made to include documents which are filed manually also.
  
• Foreign Companies Module
  Foreign companies module has been introduced, which enables the promoters to incorporate foreign companies, and file their returns online.
  
• Filing of circular u/s 86 Module
  Module for filing of circular u/s 86 was implemented in eServices.
  
• Module for filing of annual and quarterly accounts
  Module for filing of annual and quarterly accounts was developed and deployed in eServices.
• Miscellaneous items with or without Challan modules
  Miscellaneous items with or without Challan modules for the functions for which the processes were not developed in eServices were deployed in eServices.
• Entry of Multiple Forms>
  In order to facilitate the filers, process for entry of multiple forms of Form A (annual return) and Form 29 (Particular of directors and officers etc) at the same time, has been enabled in eServices.
• Frequently Asked Questions (FAQs) on eServices
  To provide further facilitation to the end users of eServices Frequently Asked Questions (FAQs) were developed and placed on the SECP website.
• Standard Operating Procedures (SOPs)
  Standard Operating Procedures (SOPs) for payment process, availability of company name, offline and online company incorporation and filing of statutory returns in the eServices regime were developed.
• Steps for improvements of eServices system
  Various steps to improve eServices system improvements have been taken including resolving speed issues and removing hindrances in functioning of processes. Option of uploading three attachments each of 2 MB has been provided in eServices for Form 10 (Particulars of mortgages, charges etc), Form 16 (Particulars of modification of mortgage, charge, etc), Form 17 (Memorandum of complete satisfaction of mortgage, charge, etc) and filing of accounts process. Option to cancel process before submission was provided for different processes.

Scanning and Archiving Project
All the physical record of companies maintained at CROs except CRO Peshawar was scanned during the previous financial year. During this FY, the scanning pertaining to physical record of companies maintained at CRO Peshawar was also completed.

Creating Awareness of eServices
Post launch seminars were held in the cities of Karachi, Lahore, Islamabad, Rawalpindi and Sialkot, in collaboration with professional bodies, i.e., respective chambers, tax bar associations, and ICMAP, for creating awareness on eServices. Training workshops for journalists were also held at Karachi and Islamabad. These seminars and workshops were widely attended and an overwhelming response was received. Stakeholders also gave suggestions for further improvement in eServices to facilitate users.

Shifting of record of dead companies to CRO Islamabad for dead record room and its scanning
Record of all the dead companies of all the CROs has been transferred to CRO Islamabad. Proper placement of these files shall be made according to plan.

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Development of Legal Framework

• Promulgation of the Companies (Corporate Social Responsibility) General Order, 2009
  The General Order has been issued to prescribe narrative and monetary disclosures of Corporate Social Responsibility (CSR) activities undertaken by the companies through their directors’ report to the shareholders annexed to the annual audited accounts. The Order is applicable on all the public companies from the financial year beginning on or after July 1, 2009, and entails disclosure of all the charitable and philanthropic activities as diverse as corporate philanthropy, environmental protection, occupational safety and health, community welfare, etc. carried out by them during each financial year. Through the mandatory disclosure of CSR activities carried out by a company, the General Order would provide an impetus for all the public companies to undertake charitable and philanthropic activities to the benefit of their customers, suppliers, employees, shareholders, communities, and all the other stakeholders.
• Deferral of the Companies Cost Accounting Records (General Order), 2008
  With a view to have cost appraisal of the companies, to identify inefficiencies in the production and increase profitability and performance, cost accounting records were prescribed by the Commission, vide General Order dated 26 September, 2008, for companies engaged in manufacturing, production and processing of fertilizer, thermal energy, petroleum refining, natural gas and polyester fiber. In view of the reservations received from the aforesaid sectors, the applicability of the General Order has been deferred to be effective from the financial year commencing on or after July 1, 2010. The Institute of Cost and Management Accountants of Pakistan has also been requested to prepare guidelines to facilitate the companies in the aforesaid sectors ensure maintenance of cost accounting records for the purpose of cost audit.
• Amendments in the Group Companies Registration Regulations, 2008
  The SECP promulgated the Group Companies Registration Regulations on December 31, 2008 to provide a regulatory framework for the formation of group companies. The Regulations were also aimed to empower the Commission to designate the group companies contemplating to avail group relief and group taxation benefits from the Federal Board of Revenue (FBR) in terms of the provisions of Income Tax Ordinance, 2001.
  However, on the basis of consultation with the stakeholders, a few provisions of the Regulations were found to have jurisdictional overlaps with those under the regulatory purview of FBR. Such provisions were amended on September 7, 2009 to ensure that both the corporate and tax regulators are able to effectively exercise their powers under their respective jurisdictions.
• Amendment in the Companies (Invitation and Acceptance of Deposits ) Rules, 1987
  The SECP with the approval of the Federal Government, has withdrawn the earlier amendments made in the Companies (Invitation and Acceptance of Deposits) Rules, 1987 (the Deposit Rules) as these rules were impracticable and SECP faced major impediment owing to the 'advances' in the real estate sector are actually pre-payments and not 'deposit'. Besides, the subject of housing and real estate development falls within the Provincial legislative jurisdiction, as it neither appears in the Federal nor in the Concurrent Legislative List of the Constitution. Provincial Governments have requisite legal framework and administrative machinery for the regulation of the housing and real estate companies.
• Delegation of Powers
  Delegation of powers and functions of the Commission delegated to Commissioner, CLD, Executive Director (Regn.) and Registrar of Companies and Registrars concerned was notified vide S.R.O. 659(I)/2009 dated 14th July, 2009. The said notification provides a consolidated version of previous notified delegations with partial modification.
  Further, vide S.R.O. 658(I)/2009 dated 14th July, 2009, the powers of the Registrar conferred by 476(1)(b) were delegated to Registrar concerned and powers of Additional Registrars of CRO Karachi, Lahore and Islamabad conferred by section 476(1)(a) were delegated to Joint Registrars of respective CROs. Delegation will help in quick disposal of cases.

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Developmental Activities

• Consultation in World Bank Global and Sub National Doing Business Study and Improvement in Ranking
  World Bank Doing Business Report 2010 revealed significant improvement in ‘Starting a Business’ indicator, which interalia takes into account the procedure of registration of a company. The country’s ranking has improved by 17 points from 80th in 2009 to 63rd in 2010. The improvement seems to be mainly attributed to launch of eServices by SECP.
  World Bank (WB) along with Economic Reforms Unit (ERU), Finance Division, Govt of Pakistan also carried out a Sub-National Doing Business (SNDB) study for improving business environment across the country. A Right of Reply (ROR) Mission comprising of World Bank/USAID officials from Washington and Pakistan, and ERU officers, visited Pakistan from 7th to 19th August, 2009. The ROR mission held consultative meetings with officers of RD and CROs Lahore, Karachi, Quetta and Islamabad, to get feedback on current procedures in registration process and discuss future plans. They also visited CROs and appreciated the level of facilitation provided to general public at these offices.
  The Sub national Doing Business in Pakistan Report has been released, which states that Pakistan performs relatively well in starting a business as compared both regionally and globally. Findings of the report indicate that registration of a company has become faster after introduction of eServices. Report gives a comparison across different cities, according to which Islamabad ranked 1st in starting a business indicator, followed by Faisalabad.
  
• Assessment of Anti-Money Laundering/Countering the Financing of Terrorism (AML/ CFT) regime
  The Asia Pacific Group of the World Bank on Money Laundering undertook an AML/CFT assessment during the year under review. The assessment, inter-alia, focused on the beneficial ownership information in respect of the persons exercising ownership and control of the companies as well as on the regulatory framework for Non-Profit Organizations (NPOs) operating in corporate form (companies registered under license granted under section 42 of the Ordinance). Based on the feedback provided, a rating of ‘Partially Compliant’ status was awarded vide the Mutual Evaluation Report dated July 9, 2009 in the aforesaid areas.
• Representation in the Corporate Registers Forum
  Being the charter member of Corporate Registers Forum (CRF), an international not for profit organization for administrators of corporate and securities registers, SECP actively participates in the activities of the forum. Regular interaction with the registrars of other jurisdictions through the discussion forum of the CRF and participation in global surveys on various matters, takes places.
• Data sharing
  In response to a request made to the State Bank of Pakistan for considering giving access to SECP of its database of Consumer Protection Department of CIB Reports, they have made an arrangement for providing these reports through e-mails to the designated officers of SECP’s relevant departments.

Promotion of Compliance

• Facilitation extended in filing of annual returns and annual accounts
  With the view to facilitate companies in timely filing of returns and to promote corporate compliance, the Commission provided took efforts to facilitate companies on the due dates of filing of annual returns and annual accounts. CROs remained open on Saturday on the closing dates. Last dates for filing of annual accounts and annual returns were also extended to extend maximum facilitation for collection of these documents. Advertisements, public notices and press releases for creating awareness were also issued.
  
• Advertising campaign against Unauthorized/Illegal Businesses and to improve statutory compliance
  In line with previous efforts, an advertising campaign was undertaken to create awareness amongst the general public against fraudulent business activities and to improve statutory compliance.
  As a part of the SECP-SBP Joint advertising campaign, advertisements/ public warnings were published, on fraudulent business activities by companies/ non corporate entities and individuals. SECP also issued public warning on unauthorised activities in case of specific companies.
  Further advertisements were published on filing of annual returns, re-launching of Companies Regularization Scheme, and compliance issues.
• Compliance to Companies (Appointment of Legal Advisors) Act, 1974
  The Honorable High Court of Sindh, vide its order dated 16th March, 2010, in CMA No.9056 of 2009 (CP 3162 of 1993), directed the SECP to compile and provide to the Secretary Finance, Government of Pakistan, a report containing the names of all companies who have not appointed Legal Advisors in terms of the Act, for the purpose of initiating necessary action against such companies as per law.
  A list of companies which have not yet appointed the Legal Advisors as required under the law, was placed on website, to encourage compliance before sending the list to the Federal Government. Further advertisement in nation wide newspapers and press release was issued asking the companies to make compliance.
• Promoting compliance by foreign companies and international NGOs
  Part 14 of the Companies Ordinance, 1984 provides registration of foreign companies with the SECP. It was noted that various foreign companies including NGOs after establishing their place of business in Pakistan neglected to register their documents with the SECP whereas registered themselves with the Economic Affairs Division by signing Memorandum of Understanding with the Government of Pakistan. In this regard, a meeting of the officers of the Corporatization & Compliance Department and CRO Islamabad was held with the senior officers of Economic Affairs Division whereby it was discussed and mutually agreed that such companies may also be registered itself with the Commission as per the mandatory provisions of the Companies Ordinance, 1984. In response of this initiative, various foreign companies filed their documents for their registration.
• Activation Cell
  Activation Cell has been formed at RD and CROs with the mandate to make every effort for activation of dormant/ defaulter companies. The task force would look after the inactive companies and try to at least activate 25 % of these companies. A comprehensive campaign is being implemented by the task force.
  In this manner, this will result in activation of inactive companies and also enable the CROs to better focus on active companies and monitoring of active companies will also improve.

Facilitation Measures

• Extension of Companies Regularization Scheme (CRS)
  An amnesty scheme, ‘Companies Regularization Scheme’ was initially launched for 45 days from May 15, 2009 to June 30, 2009, however, keeping in view the encouraging response received from the corporate sector, the scheme was further extended upto July 31, 2009. The scheme enabled filing of overdue returns on payment of only normal filing fees and provided complete waiver of additional late filing fees and penalties. The scheme was applicable on all types of companies other than listed companies.
  Circular to companies, letters to Chambers of Commerce and Industry and other professional bodies, and guidelines to CROs were issued Advertisements and press releases in nation wide newspapers were issued for creating awareness of the scheme during the extended period. CROs remained open till late hours on last date of the scheme to facilitate collection of returns.
  The scheme received an overwhelming response from the corporate sector and a total of 4,290 companies availed this opportunity as on 31.07.2009 and filed 18,106 returns.
  

Response of Companies Regularization Scheme as on 31.07.2009

• Help Desk at Faisalabad Chamber of Commerce and Industry (FCCI)
  A help desk has been established at FCCI for having a liaison with business community to encourage corporatization and compliance. For this purpose an official visited the FCCI on every Tuesday for four hours throughout the year.
  As a part of the SECP-SBP Joint advertising campaign, advertisements/ public warnings were published, on fraudulent business activities by companies/ non corporate entities and individuals. SECP also issued public warning on unauthorised activities in case of specific companies.
  Further advertisements were published on filing of annual returns, re-launching of Companies Regularization Scheme, and compliance issues.
• Review of English Version of Promoters’ Guide
  The promoters’ Guide which guides the promoters in formation of a company was already available on web-site. The guide was reviewed to amend it in line with eServices scenario and uploaded on web-site.
  
• Persian version of Promoters’ Guide
  The promoters’ Guide has been translated in Persian language to facilitate foreign companies and investors having Persian origin. SECP is thankful to the Commercial Counsellor in Iran, Embassy of Pakistan for his contribution towards provision of the translation guide. The translated guide has been placed on web-site.
• Guide for Appointment of Statutory Auditors and Ancillary Matters
  A guide explaining the procedure for appointment of statutory auditors and ancillary matters was developed and placed on SECP’s web-site.
  
• Change of Name Guide
  A guide explaining the Change of Company Name process was developed and placed on SECP’s web-site. The guide provides step wise procedure for both online and offline submission of change of company name application.
  
• Attendance of Directors of Listed and unlisted public companies in the board meetings through Tele/ Video Conferencing
  In order to facilitate the corporate sector for holding the board meetings, the procedure for holding board meetings through tele/video-conferencing has further been simplified, vide the Commission’s Circular no. 6 of 2010. Now, it would not be essential to secure the tele/video recording of the proceedings of the meetings which would curtail the unnecessary expenditure of the companies.
  
• Facilitating shareholders of Ahmad Spinning Mills Limited for lodgement of their claims
  Pursuant to the order of the Hon’ble High Court of Sindh in the matter of M/s Ahmad Spinning Mills Limited titled M.A. 04 of 2007 Sheikh Abdul Wahid & Others vs. Securities and Exchange Commission of Pakistan & Others, necessary instructions were issued to the Company Registration Offices to make arrangements for provision of claim forms containing the prescribed procedure and supporting documents to enable the shareholders lodge their claims with the Commission.
• Meetings with Corporate Consultants and Company Secretaries
  In house meeting with corporate consultants/ intermediaries were held at Company Registration Offices to obtain their feedback for improvement in various areas mainly operational working of CROs. Different issues regarding online & offline filing were discussed and some useful suggestions were received. SECP’s efforts and initiatives for extending facilitation to the corporate sector were much appreciated.
  Meetings with Company Secretaries of prominent Listed Companies were also held at CROs. Practical demonstration of eServices was made before them to discuss the issues/ problems faced by them. These seminars remained quite interactive.