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August 12, 2020

NBFCs draft amendments issued

Business

August 12, 2020

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued draft amendments in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 for public consultation, a statement said on Tuesday.

To promote an enabling business environment and provide ease of doing business, the commission, through these amendments, has proposed introduction of perpetual licence for non-banking finance companies by replacing the existing requirement of renewal of licence after every three years, it added. The SECP has also proposed to allow a single Non-Banking Finance Company to undertake different licensed activities.

Moreover, the lending NBFCs will be required to obtain Private Equity and Venture Capital (PE&VC) licence, while the investment advisers will be allowed to manage and launch exchange traded funds and listed collective investment schemes.

Moreover, to encourage formation of new NBFCs, a more rationalised procedure to seek commission’s permission to form a NBFC and obtain relevant NBFC licence has been proposed.

Draft amendments also streamline the requirements regarding sponsors and majority shareholders of NBFCs, the statement said.

It proposes that only first-time promoters would be considered as sponsors, while the person replacing a sponsor and holding less than 10 percent shares will not be required to obtain the commission’s approval.

The requirement of blocking of shares is proposed to be applicable only when a person holds 10 percent or more shareholding.