SECP chief says govt should give one-time amnesty scheme
for owners of offshore companies
ISLAMABAD: The government has proposed exemption of foreign companies from disclosing their beneficial owners in Pakistan to local authorities in its proposed Companies Ordinance Bill 2016.
However, domestic companies, its directors or officials will have to declare their global holding in any offshore company which the SECP will maintain in its Companies’ Global Register of Beneficial Ownership.
As in the past, people had taken their capital to other countries due to law and order situation in Pakistan, so the government should give one-time amnesty scheme for the owners of offshore companies to declare their hidden assets by paying nominal taxes, Chairman of the Securities and Exchange Commission of Pakistan (SECP) Zafar Hijazi said on Tuesday in a news conference.
According to the amendments made in the Companies Bill, provision of information relating to beneficial owners of foreign companies will only be required to the commission and the company will be bound to provide the said information in connection with any inspection, inquiry or investigation. In case of default, a penalty of level-3 has been proposed.
Every Pakistani substantial shareholders or officials of a company even having a single share in a foreign company or a party corporate has been required to report to the company regarding beneficial ownership and then report it to the commission to be included in the Global Register. Earlier, they were required to report to the commission in case of having 10 percent or more shareholding in a foreign company.
SECP Chairman Zafar Hijazi in a news conference while explaining the deliberations on the Companies Bill, 2016 in the subcommittee of the Standing Committee of the National Assembly on Finance, Revenue, Economic Affairs, Statistics and Privatisation said that many amendments to the companies’ bill were introduced and cleared by the subcommittee. Now the bill along with amendments would be sent to the National Assembly to complete the needed legislative process. The government has introduced five dozen new sections in the companies’ bill, while amendments have been made in existing 306 sections.
Around 45 comments/letters were received from public/media and they raised concern on 60 sections of the Companies Bill, 2016. Amendments to 41 sections have been made based on feedback which has also been concurred by the subcommittee that has held five meetings in January 2017 and agreed upon various changes.
Under section 452, the provision relating to global register of beneficial ownership is being revised so that this section is applicable only to Pakistani nationals. Further amendment has been made to criminalise failure by any person to provide requisite information to the registrar concerned. Further, such information will be shared with FBR and any other agency, authority or court. It is also proposed to include reporting of any interest other than investment in securities or interest in a foreign company by a company, to the registrar concerned along with the annual return of the company.
Security clearance of companies’ shareholders, directors and office bearers will be required from interior ministry. Chairman said that they had sent some names to the Interior Ministry for security clearance, mostly of NGOs.
Under Section 153, power to grant exemption has been proposed to be given to the commission from the requirement for a director to hold NTN as per the provisions of Income Tax Ordinance, 2001.
Real estate companies soliciting advances shall be required to recognise their income in accordance with International Financial Reporting Standards (IFRS). Further, the escrow account to be maintained for the real estate project shall not be subjected to any attachment except for the purpose of the project.
The Section 301 has been amended to include that in case a company does not commence its business within a year from its incorporation, or suspends its business for a whole year, it can be wound up. The Section 451 of the bill has been amended to give an entire framework for Shariah Complaint Companies.
The Section 455 – enhanced scope to register all intermediaries providing services to companies to ensure quality of service.
The Section 178(5) has been amended and physical records of resolutions and meetings of board to be maintained for 10 years instead of 20 years. Section 155, the number of directorships has been amended to make it in line with code of corporate governance rules. Section 158 - retirement of first directors has been amended to cater for subsequent appointments. Section 172 – extended to have powers to decide disqualification of all the directors. Section 192 has been amended and Chairman of the Board of a company to report on the performance of the Board and not the Company.
Zafar Hijazi, urged the investors not to lose their hard-earned money to unscrupulous elements. They should always deal with licensed brokers who are registered with the SECP. He said SECP had issued these guidelines for capital market investors. He said that investment deal should be made with a licensed broker registered with SECP, as investment with the unauthorised broker is at risk and prone to fraud and investors could lose his money in the hands of unauthorised broker. Similarly, he said trade only through your own accounts with the Broker & CDC and never authorises 3rd party to operate your account. Chairman also said, “Always make payments to broker by crossed cheque and obtain receipts”.