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Companies Act 2017 Bounds Overseas Pakistanis to Disclose Assets

15/06/2017

SECP-Companies-Act-2017

The Senate has approved the draft of Companies Act 2017, replacing the 33 years old Companies Ordinance 1984. The experts are of the view that the new act is better in several terms than the Zia-ul-Haq era ordinance – it is simple and truly in accordance with the international financial practices.

The ambiguous and unclear clauses of the ordinance have been replaced with clear and unambiguous clauses of the Companies Act 2017, and the Senate has also approved it. While seeing the details of Ordinance, we come to know that three new slabs have been introduced in the Act for awarding penalty to law violators.

The new Act has also reduced the discretionary powers of the Security Exchange Commission of Pakistan (SECP) to a large extent. An effort has also been made for the corporate managers to let them conduct their activities swiftly, e.g. holding of swift meetings of the Board of Directors General.

However, several new responsibilities have been assigned to the SECP under the new Act such as authentication of the Sharia sector, certification of real estate and approval of merger of companies. The SECP has also been assigned the task if providing conciliation services and mediation between shareholders and the companies in case of conflict.

Certainly, there is nothing is like an ideal environment for the businesses and companies to thrive completely but the new law would enable the international companies to do business in Pakistan more easily and would also strive to implement the law strictly like in other countries of the world, where company laws and corporate governance are strictly implemented.

In the new Act, every shareholder, who has a mentionable number of shares in a company, or any official of the company, like its secretary, who is a Pakistani citizen, but also holds citizenship of any other country, whether living in Pakistan or abroad, has been bound legally to report to his/her company in this regard. He/she will have to provide all details if he has shares or financial interests in any company in any part of the world, or has any share in any property, which have been notified by the SECP.

After implementation of this Act, it will be compulsory for every official of the company to check money-laundering, under the Anti-Money Laundering Act 2017. The most daring step of this legislation is the provision of the watchdog status to the SECP in order to play a crucial role in investigations. It has been empowered to block the businesses of fake real estate agents, safeguard the interest the interest of investors and help promote the legal real estate projects – in order to provide protection to the common people' s investment in the real estate sector.