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Professional Service Providers
Overview

Company Secretaries
Company secretaries play an important role in improving the governance of corporate entities. At present, there are no effective regulatory provisions or institutions for regulation and supervision of these service providers. The profession is fast growing though, particularly due to the legal requirements for appointment of company secretaries by listed companies and single member companies (SMCs). In this regard, the SECP has prescribed the qualifications of company secretaries to be appointed by listed companies and SMCs, through the Companies (General Provisions and Forms) Rules, 1985 and the Single Member Companies Rules, 2003, respectively.

Administrators, receivers and liquidators play
Administrators, receivers and liquidators play an important role in not only corporate insolvency but also in prevention of mismanagement of companies. This role is reflected in various sections of the Companies Ordinance, 1984 including Section 295 whereby the SECP may order appointment of an administrator from a panel maintained by it to manage the affairs of a company that is not being run properly. Similarly, in winding up of companies by the court, an official liquidator is appointed from a panel maintained by the court, on the recommendations of the SECP. Presently, there is no regulatory framework in place for these professional service providers.

Financial Analysts
Financial and investment analysts play a crucial role in the securities market. However, there is presently no direct legal requirement for regulation or supervision of these service providers.

Actuaries
The SECP may give assent to or reject, on reasonable grounds, the appointment of an actuary by any insurance company under Section 26 of the Insurance Ordinance. The responsibilities of actuaries and their dismissal are provided in Section 27 of the Insurance Ordinance. Moreover, Section 22(4)(da) of the Securities and Exchange Commission of Pakistan Act, 1997 requires the SECP, while exercising its powers, to have regard to the professional competence and capability of persons engaged in the provision of services in the insurance industry. 

While the said provisions do provide the SECP with authority in respect of appointment of actuaries, there is no specific provision empowering the SECP to prescribe a code of conduct for actuaries or impose penalties in case of deviation from responsibilities laid down in the Insurance Ordinance.

Credit Rating Companies
In terms of Section 32-B of the Securities and Exchange Ordinance, 1969, the SECP is vested with powers to regulate credit rating companies. The Credit Rating Companies Rules, 1995 provide the necessary legal framework for registration and certain operational matters of credit rating companies. Under the said Rules, the SECP has powers relating to registration, renewal and cancellation of licenses of these companies. Moreover, the SECP can also give them necessary directions; accordingly, it has been made mandatory on credit rating companies operating in the country to submit their annual rating reports to the SECP.

(The list and website addresses of stakeholders, as available on the above mentioned websites, are for general information only. SECP shall have no responsibility for any omission or incorrect data and information available on these websites.)

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Code of Ethics
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Appointment of Professional Service Providers
Company Secretary
In terms of Section 204A of the Companies Ordinance, 1984, a listed company shall have a whole time secretary and a single member company shall have a secretary possessing such qualification as may be prescribed.The Code of Corporate Governance, in clause (xv), also requires the appointment of a company secretary whose terms and conditions of appointment shall be determined by the Chief Executive Officer with the approval of the board of directors. 

Qualifications of company secretary, appointed in terms of Section 204A of the Companies Ordinance are prescribed in Rule 14 B of the Companies (General Provisions and Forms) Rules, 1985. These qualifications are as follows:

  • A member of a recognized body of professional accountants;
  • A member of a recognized body of corporate/chartered secretaries;
  • A retired government servant in BS-19 or equivalent or above with at least fifteen years service; and
  • A person holding a masters degree in Business Administration or Commerce or being a Law Graduate from a university recognized by Higher Education Commission and having at least two years relevant experience:

Provided that a person already engaged by a company as secretary before the 26th October, 2002 may continue in that capacity if he has an experience of not less than five years in that position.

Statutory Auditor
Every Company is required to appoint an auditor or auditors at each annual general meeting, to hold office till the next annual general meeting as per the provisions of Section 252 of the Companies Ordinance, 1984. A notice shall be required for a resolution to be passed at the annual general meeting of the company relating to appointment and removal of auditors in accordance with Section 253 of the Companies Ordinance. The qualification of auditors is outlined in Section 254 of the Companies Ordinance.

Cost Auditor
Where any company or class of companies is required under clause (e) of sub-section (1) of section 230 of the Companies Ordinance, 1984 to include in its books of account, the particulars referred to therein, the Federal Government may direct that an audit of cost accounts of the company shall be conducted in such manner and with such stipulations as may be specified in the order by an auditor as given under section 258 of the Ordinance.

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Special Purpose Vehicle
Under section 4 of the Securities and Exchange Ordinance, 1969, any Stock Exchange which fulfills such conditions or complies with such requirements as may be prescribed to ensure fair dealings, protection of investors and its sustainable economic viability shall be eligible for registration. These requirements, among other matters, may relate to:-

  • A person may be registered as a Special Purpose Vehicle if it is (i) registered as a public limited company; or (ii) a trust duly formed under the Trust Act, 1882; or (iii) body corporate formed under any law for the time being in force and owned or controlled, whether directly or through a company or corporation, by the Federal Government or a Provincial Government;
  • no director, officer or employee of such person has been adjudged as insolvent or has suspended payment or has compounded with his creditors or has been convicted of fraud or breach of trust or of an offence involving moral turpitude; and
  • the promoters, directors and trustees of such person are, in the opinion of the SECP, persons of means and integrity and have special knowledge and experience of matters to be dealt with by a Special Purpose Vehicle.
  • At the time of registration, following information/data have to be submitted along with the Registration form:

    • Details regarding the purpose of registering as an SPV, term of SPV, description of transaction (like name of originator, amount of capital to be offered for subscription, list of strategic investors, nature & amount of security, if any, rate of return/profit on instrument being issued, redemption schedule, monitoring mechanism etc;
    • Constitutive document of the applicant (company/trust/body corporate)
    • The undertakings by the directors of the company/body corporate or by trustees in order to comply with the requirement of rule 4 (b) of the Companies (Asset Backed Securitization) Rules, 1999 (ABS Rules) on non-judicial stamp papers attested by Oath Commissioner;
    • Copies of the CIB reports from State Bank of Pakistan confirming that there are no overdue loans and/or defaults by the company/body corporate and its directors. In case of trusts, CIB of the trustee may be furnished;
      The affidavits/undertaking from the promoters, directors of the company/body corporate or from the trustee that they have special knowledge and experience of matters to be dealt with by a SPV, as required under rule 5 (c ) the ABS Rules, duly attested by Oath Commissioner;
      Forms 3, 27, 28 and 29 duly certified from the concerned Company Registration Office (CRO), in case of applicant being a company;
    • Profiles of the directors and sponsors of the company containing the details regarding their professional experience;
    • Paid Challan evidencing payment of Rs. 25,000/- as application filing fee;
    • Undertaking, on Non-Judicial Stamp Paper, from the Chief Executive or any Director/Sponsor of the applicant authorized by the Board of Directors, to the effect that the applicant shall comply with all the conditions of rule 7 and 8 of the ABS Rules;
    • Break up of the utilization of the proceeds of the issue by both the SPV and Originator;
    • Power of attorney by the applicant in favor of consultants/advisors.
    • Any other document required by the SECP at the time of registration of SPV.
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Credit Rating Companies
The Credit Rating Companies Rules, 1995 provide the following;

Eligibility for Registration
A company proposing to commence business as a credit rating company shall be eligible for registration under the Credit Rating Companies Rules, 1995 if it fulfils or complies with the following conditions or requirements, namely:-

  • that such company is incorporated as a limited company under the Companies Ordinance, 1984 (XLVII of 1984);
  • that such company has entered into a joint venture or technical collaboration arrangement with an internationally recognised credit rating institution for a period of not less than five years;
  • that no director, officer or employee of such company has been convicted of fraud or breach of trust or has been adjudicated as insolvent;
  • that the promoters of such company are, in the opinion of the Authority, persons of means and integrity and have special knowledge of matters which the company may have to deal with as a credit rating company; and
  • that the chief executive of the company is not chief executive of any other company or holding similar position in any other company.

Registration
Any company which is eligible for registration under rule 3 of the Credit Rating Companies Rules, 1995 as a credit rating company may make an application in Form I to the SECP for registration. This application shall, besides the other documents referred to in Form-I, be accompanied by a fee of one hundred thousand rupees as registration fee.

The SECP may, if it is satisfied after such enquiry and after obtaining such further information as it may consider necessary that the applicant is eligible for registration and that it would be in the interest of the capital market so to do may grant a certificate of registration to such company in Form II.

Renewal of Registration
The certificate of registration of a company shall be valid for one year and shall be renewable on payment of a fee of ten thousand rupees through an application made on Form III.

The SECP shall, after making such enquiry and after obtaining such further information as it may consider necessary, renew the registration of such company for one year in Form IV within thirty days of the receipt of the application or further information, as the case may be.

Cancellation of Registration
Where the SECP is of the opinion that a credit rating company has contravened any provision, or has otherwise failed to comply with any requirement of the Ordinance or of any rule or direction made or given thereunder, the SECP may, if it considers necessary in the public interest so to do, by order in writing, cancel the registration of the credit rating company. However, no such order shall be made except after giving the credit rating company an opportunity of being heard.


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