Newly-proposed law to apply on SECP registered real estate firms

ISLAMABAD: A new provision proposed in the Companies Bill, 2017 would only apply to the companies, which are registered with the Securities and Exchange Commission of Pakistan (SECP) and carrying out the business of real estate development, a statement issued by the commission said on Thursday.

It is already abundantly clear that other business structures such as sole proprietorship or partnership do not fall within the SECP’s jurisdiction, it added. Further, the intent of the provision is limited to the extent of protection of advances and deposits collected by such companies against future development / delivery of real estate in the form of plots or houses.

The SECP also said the relevant land and building control authorities would continue to regulate the business of such companies as is being presently regulated.

The provision will provide certain safeguards to ensure that deposits / advances collected by such companies from their customers are exclusively used for the purpose of development and construction of relevant project and to avoid misuse of such funds towards other activities; thereby, exposing the risk of default / delay in delivery.

Similarly, the SECP will ensure that the relevant formalities, which mainly include approvals from land and building control authorities, are obtained by such real estate companies before publication of advertisement, soliciting deposits / advances from prospective buyers of their projects, it said.

Nevertheless, the applicability of this section will come into effect from a future date to be notified by the federal government. Therefore, after promulgation of the new Companies Bill, 2017, this provision would not come into force unless notified as above, it added.