In its role as the regulator of an emerging market, the SECP strives to provide a facilitative regulatory environment.
For Small and Medium Enterprises
In order to encourage small and medium business enterprises to transform into corporate entities, and to broaden the scope of the disciplined corpo r ate sector, the SECP undertook the following reforms:
On the recommendations of a Task Force constituted by SECP, the Government included the concept of small company in the Finance Bill, 2005, Preferential tax treatments have been granted to small companies for easing their tax burden, including corporate income tax rate of 20%, exemption from the withholding tax, and from mandatory obligation of minimum tax;
To promote corporate growth and extend the benefits of corporate status to small and medium enterprises, mutual collaboration with SMEDA took place.
For Foreign Investors
eServices has also been made available for foreign companies. Guidance is provided to foreign investors at facilitation centres at the Company Registration Offices of Karachi, Lahore, Islamabad, Multan and Faisalabad.
Promoters’ Guide in different languages, i.e., English, Urdu, Chinese, Arabic and Persian, has been provided on web-site, to facilitate foreign investors/ companies.
Foreign Companies Guide has also been provided on web-site, explaining the procedure and requirements for registration and filing by foreign companies
The SECP has extensively modernized the functioning of its CROs and introduced a highly efficient and automated work environment. The Corporatization & Compliance Department of SECP has developed an expeditious corporatization process at its Company Registration Offices. A company can now be incorporated within a maximum period of three days.
The SECP achieved an important milestone on September, 2008 by launching eServices. Through eServices, online processing of availability of company name, incorporation of companies, applications including change of name, alteration in the memorandum of Association, conversion of status of companies etc and filing of statutory returns, has been made available. It enables the promoters and other officers of companies to interact online using the eServices portal, without visiting the offices of SECP.
To facilitate promoters, SECP has set up facilitation Centres at the Company Registration Offices of Karachi, Lahore, Islamabad, Multan and Faisalabad. A series of guideline booklets have been launched by the department for individuals and companies to get information on various legal and business topics and issues associated with company registration and post incorporation requirements.
To encourage company formation, various web-based facilities have been provided for company promoters and general public. To facilitate promoters, the name search facility has been provided on the website and is being regularly updated. Standardized memorandums and articles of association have been developed and placed on the web-site for the convenience of promoters in registering a company. New features on web-site were introduced including incorporation fee calculator and schedule of filing. Statutory forms are also available in downloadable versions for facilitation and use.
Stamp duty on the memorandum and articles of association of new companies was an impediment to the development of corporate culture. On the recommendation of SECP, the federal government and all the provincial governments have abolished the stamp duty on memorandum and articles of association.
An efficient automated environment has been created at the CROs to ensure maintenance of easy-to-access corporate records. Data Refining Exercise was also completed to update data in the Companies Registration and Compliance System (CRCS), which is the main data repository containing information of all companies. In order to support the eServices, all the physical record of companies maintained at CROs has been scanned. Benefits of scanning and archiving are data security, paperless environment, quick retrieval, cost effectiveness, time saving and better performance.
SECP regularly participated in ITCN Asia Exhibition, from 2000 to 2007. Each year during the course of the exhibition, instant assistance on company incorporation was provided and regulatory issues were explained. Regular awareness seminars on eServices, corporatization and corporate compliance have been conducted in various cities of the country in collaboration with Chambers of Commerce and Industry and Tax bar associations. The SECP continuously launches various advertising campaigns in nation wide newspapers for creating public awareness on corporate compliance, annual returns filing, facilitation schemes, etc. Further, the SECP also issues public warnings in newspapers for creating awareness on illegal business activities, in joint collaboration with SBP.
For Listed Companies
For Non-Banking Finance Companies
- Placement of Interim Accounts on Website
In view of advancement in technology and the benefits it provides, the SECP, vide Circular 19 dated April 14, 2004 allowed listed companies to place their interim accounts on their websites, with prior approval of the shareholders and the SECP. This reduces dispatch cost of companies and time taken in circulation of these accounts by post. However, if any shareholder requests the company to send him the accounts through post, the company will do so without charging any cost to the shareholder.
- Video/Tele Conferencing
The SECP has issued Circular No. 30 and Circular No. 18 dated December 31, 2003 and October 18, 2005 respectively, which facilitated the companies to hold their Board of Directors’ meetings through video and teleconferencing. This measure is intended at facilitating companies in achieving greater participation of such directors who are outside the country and cannot attend board meetings through physical presence, for any reason.
The SECP has developed an information system – the Specialized Companies Returns Submission and Compliance System (SCRCS) – for making the off-site surveillance mechanism more effective. It is expected that this system will be operational within the first quarter of year 2006. The SCRCS will not only rationalize the number of returns submitted by non-banking finance companies but will also enhance the efficacy and utility of the submitted information.
For Issuance of Term Finance Certificates
In order to develop the corporate debt market and to provide for a simplified and efficient system for issuance of Term Finance Certificates (TFCs), the SECP has taken various steps. It has revised the Guidelines for the Issue of TFCs whereby (i) the limit on the amount that can be retained under the Green Shoe Option (GSO) has been removed; (ii) the condition that “In case, issue size is Rs.1 billion or above, or where the rating assigned is triple B minus (BBB-), the Commission may ask the issuer to get rating from another Credit Rating Agency” has been removed and (iii) the term small investors’ has been explained as those investors which hold TFCs of upto Rs. 200,000.
For Dormant Companies
The SECP has, time and again, launched facilitation schemes, i.e., Companies Regularization Scheme (CRS) and Companies Easy Exit Scheme (CEES). CRS provided relief to companies who defaulted in filing of various statutory returns under the Ordinance. CEES provided an easy exit route to companies which have neither any assets nor any liabilities to discharge.