ISLAMABAD: The government has presented Securities Bill 2014 before the Parliament in order to replace the existing Securities and Exchange Ordinance 1969 with the objective to enhance powers of the regulators.
A brief prepared by the Finance Ministry for parliamentarians said presently the securities market is being regulated by the Securities and Exchange Commission of Pakistan (SECP) under the Securities and Exchange Ordinance, 1969 (SEO 69).
The SECP feels in order to encapsulate developments in the securities market over a period of time, introduce international best practices and incorporate the International Organization of Securities Commission principles of securities regulations, it is important that SEO 69 should be repealed and replaced with a comprehensive modern and all encompassing piece of the securities law.
There are certain proposed provisions, which define takeover offers and states when companies are deemed to be related for the purposes of takeovers. This part enables the commission to make detailed regulations with respect to making and conduct of takeovers.
Relating to the offence of insider trading, it explains who insiders are and what constitutes inside information and makes listed companies responsible to disclose inside information.
The offences under the act, which include false trading and market rigging; market manipulation; fraudulently inducing trading in securities; employment of fraudulent or deceptive devices and the making of false or misleading statement to induce others to enter into securities transactions.
For the supervision and investigation, there are certain proposed clauses that deals with the supervision and investigation powers of the commission.
It empowers the commission to call for information, conduct inspections and investigation and outlines the powers of the investigator in relation to investigations. It also makes an offence the destruction, falsification, concealment of any document,
which is relevant to an inspection or an investigation.
The brief also proposed granting power of intervention by the commission in relation to licensed persons.
It empowers the commission to intervene in the activities of the licensed person if it appears to the commission that it is in the interest of the customer or public, the licensed person is not a “fit and proper” person, the licensed person has contravened or failed to comply with any provision of the act, any rule, or any regulation made under the act or the licensed person has furnished information that is false, inaccurate or misleading.
Under this part, the commission may restrict a licensed person from business or prohibit a licensed person from disposing of his property or maintain property of such value as appears to the commission to be desirable with a view to ensuring that the licensed person will be able to meet his liabilities in respect of his regulated activity.
Furthermore, if it appears to the commission the licensed person, which is a company, should be wound up under the Companies Ordinance, 1984, the commission may present a petition for it to be wound up in accordance with the Companies Ordinance, 1984.
Under discipline of regulated persons, this part empowers the commission to take disciplinary action in respect of licensed persons and states the “fit and proper” criteria for licensed persons.