More than two years ago, in March 2013, the Securities and Exchange Commission of Pakistan (SECP) announced that it would initiate a review of the company law framework in Pakistan. Progress was slow but the initiative gathered newfound momentum earlier this year and has now culminated in the publication of a draft Companies Bill 2015, the underlying purpose of this draft legislation is to amend and consolidate Pakistan’s core company law framework. A copy of the draft Bill was presented by the SECP’s chairman, Zafar Hijazi, to the Finance Minister, Senator Mohammad Ishaq Dar, on Saturday 28 November 2015. The SECP is inviting comments on the draft legilslation, which will replace the Companies Ordinance 1984, and feedback should be sent to claw.bill@secp.gov.pk. Notably, clause 209 of the 2015 Bill sets out the duties of directors; subsection 2 provides: “A director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment”. The SECP explains that the new corporate law would serve as a specially tailored solution to the specific needs of Pakistan’s corporate sector and cater to the aspirations of entrepreneurs and investors alike.
The Corporate Law Review Commission has been engaged in in depth research into various international corporate law models of economic significance and renown such as the US State of Delaware home of more than 60% of Fortune 500 companies, the recent Companies Act 2006 of the United Kingdom, the new Indian Draft Bill and the corporate law regimes in most major trading hubs in the Asia – Pacific region including Australia, New Zealand, Hong Kong, Malaysia and Singapore. A meticulous and extensive comparative analysis of these models has been undertaken in order to identify and study key innovations and their utility for increasing capitalisation and liberalising the market.
A robust and flexible mechanism for shareholder participation is aimed for that will stimulate small investors into taking a pro – active role in management as well as implementing more rationalized financial and audit requirements for smaller and family owned businesses while enforcing an international standard of reporting for larger corporations.
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