Pakistan to promote best global corporate practices Dar

ISLAMABAD: Minister for Finance Ishaq Dar on Saturday said the Companies Ordinance 2016 has been promulgated to encourage and facilitate best international corporate practices in the country.President of Pakistan has promulgated the Companies Ordinance 2016 to replace the Companies Ordinance 1984.The ordinance, promulgated after extensive consultations with all the stakeholders, contains provisions to simplify the procedure for incorporation of companies, enabling maximum use of technology, conversion of physical shares into book entry form in unlisted companies and encouraging paperless environment at all levels.To ensure maximum participation of members in the decision making process of the company, the Companies Ordinance 2016 encourages use of modern electronic means of communication, he said, adding that it also includes special provisions to facilitate small and medium enterprises.The Companies Ordinance 2016 also includes provisions for Shariah certifications of companies and requirements for real estate companies to provide enhanced protection to investors, he added.Dar said the new ordinance provides protection to independent and non-executive directors. “It encourages non-executive directors inclusion in the board and provisions for the manner of selection and maintenance of data bank of independent directors,” the ministers said in a statement.It also aims at addressing the issues relating to protection of interest of minority shareholders and creditors.The new ordinance also introduces other reforms such as relaxations for free zone companies’, registration of agricultural promotion companies for the development of agricultural sector and the establishment of Investor Education and Awareness Fund, the finance minister added.It also includes provisions for the registration of valuers dispute resolution mechanism through mediation and conciliation panel, passing of members resolution through circulation and simplified provisions for expeditious mergers and acquisitions.In addition, Dar said the Companies Ordinance 2016 emphasises maximum disclosures by Pakistanis to the local regulatory authorities in respect of investment in foreign companies.It also provides facilitation and regulation of the public sector enterprises.Under the new ordinance, the Securities and Exchange Commission of Pakistan (SECP) will maintain Companies Global Register of Beneficial Ownership, which will have complete record of the beneficial ownership of the substantial shareholders and officers in local and foreign companies doing business in Pakistan, he added.Moreover, he said, it will be binding on the foreign company operating in Pakistan to provide complete information of its directors, officers and or beneficial owners.Dar said that to ensure adequate measures against fraud, money laundering and terrorist financing, the new ordinance empowers the SECP to investigate and also conduct joint investigations.Further, provisions requiring officers of a company to take adequate measures to curb such violations have also been included.The minister said the Companies Ordinance 2016 has been promulgated to provide relief and incentives to the corporate sector, especially small- and medium-sized companies and to give immediate impetus to the economy and stimulate economic growth.There was a need to revamp the 32 years old Companies Ordinance 1984 to provide an improved competitive legal framework for the corporate sector in Pakistan.The finance minister said during various stakeholder consultations, market experts and the business community had expressed unanimous support for enacting Companies Ordinance 2016 at the earliest, as it would help address the longstanding demands of the business community.The new ordinance will reduce the cost of incorporating and doing business, which will enable Pakistan’s corporate sector to remain competitive in the international markets, he added.The finance minister appreciated the efforts of the SECP, Finance Ministry and various other stakeholders who made recommendations, leading to the finalisation and promulgation of the Companies Ordinance 2016.’