SECP directed to incorporate amendments in companies bill

ISLAMABAD: While deferring the Companies (Amendment) bill 2021, the Senate Standing Committee on Finance & Revenue has directed the Securities & Exchange Commission of Pakistan (SECP) to incorporate

certain changes in the bill and table it before the panel till Monday, The News learnt on Wednesday.

The Senate panel also asked the Federal Board of Revenue (FBR) to submit its report on how many amendments proposed by the Upper House of Parliament into the Finance Bill were incorporated into Finance Act 2021-22.

The committee held its meeting under chairmanship of Senator Talha Mehmood at the Parliament House to discuss Companies (Amendment) Bill 2021.

It was quite interesting that instead of approving or rejecting different clauses of bill, the chairman of the panel asked the SECP to incorporate changes in consultation with Ministry of Law and present them before the chairman till July 19, 2021.

During the proceedings of the committee, the Chairman SECP Aamir Khan stated the Companies (Amendment)

Bill 2021 would amend the Companies Act 2017 for three key objectives included promotion of startups, ease of doing business and improving business climate.

The Companies (Amendment) Bill 2021 has proposed that private companies having paid-up capital up to Rs1 million should be exempted from filing of unaudited financial statements. However, the committee proposed to increase paid-up capital from Rs1 million to Rs3 million for granting exemption to private companies from filing of unaudited financial statements.

In his presentation, Aamir Khan stated that the SECP has proposed amendment in the Companies Act to introduce the concept of “startup companies” to promote innovation & technological development and consequential change in the definition of private company. Presently no definition of “startup’’ exists in the law.

The private companies have also been allowed to issue share as other than right and other than cash.

Moreover, all companies were allowed to issue employees’ stock option schemes and buyback of their shares. Earlier, it was restricted to public and public listed companies respectively.

The SECP has also proposed measures for greater ease of doing business to promote ease of starting and doing business, encouraging innovation, promoting entrepreneurship, regulatory sandboxes etc.

Khan said the requirement of common seal by the companies had also been proposed to be abolished. In the present age of digitisation, there was no need to have requirement of common seal, he added.

The Senator from PML (Q) asked the SECP to use simple and clear language for drafting of legislation because interpretation of law became problematic because of complex legalese.