SECP told to amend clauses to facilitate start-ups
ISLAMABAD: The Senate Standing Committee on Finance Wednesday deferred the Companies (Amendment) Bill, 2021, with the directions to the Securities and Exchange Commission of Pakistan (SECP) to amend certain clauses to facilitate working of start-up companies in Pakistan.
During the review of the Companies (Amendment) Bill 2021, SECP Chairman Aamir Khan stated that the Companies (Amendment) Bill 2021 would amend the Companies Act 2017.
Three key objectives of the proposed amendments included promotion of startups, ease of doing business, and improving business climate.
The SECP chairman stated that the small businesses need to be promoted through amendments in the Companies Act 2017.
The SECP has proposed that the private companies having paid up capital up to Rs1 million should be exempted from filing of unaudited financial statements.
Committee has proposed to increase paid up capital from Rs1 million to Rs3 million for granting exemption to private companies from filing of unaudited financial statements.
Chairman of the Finance Committee Senator Talha Mahmood and committee members highly appreciated the role of the chairman SECP in introducing comprehensive amendments in the companies’ law to facilitate the corporate sector.
However, committee members asked the SECP to ensure that no discretionary powers be granted to the SECP officials under the proposed amendments.
Senator Saleem Mandviwalla asked the Federal Board of Revenue (FBR) to inform that how many tax-related amendments in the Finance Bill 2021 have been accepted and incorporated in the Finance Act 2021.
“We have no clue that how many amendments have been rejected or accepted or partially accepted,” he said.
In his presentation, Aamir Khan stated that the SECP has proposed amendment in the Companies Act to introduce concept of “startup companies” to promote innovation and technological development and consequential change in the definition of private company.
Presently, no definition of startup exits in the law.
There was a detailed discussion on the definition of the startup.
The official of the Law Division informed that the definition of the startup has been vetted by the Law Division.
The SECP chairman highlighted that the SECP has simplified establishing a company and starting a business by removing requirement to file subscription money form along with certificate of practicing chartered accountant.
The private companies have also been allowed to issue share as other than right and other than cash.
Moreover, all companies allowed issuing employees’ stock option schemes and buyback 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 by the SECP to promote ease of starting and doing business, encouraging innovation, promoting entrepreneurship, and regulatory sandboxes etc.
Aamir Khan pointed out that the requirement of common seal by the companies has also been proposed to be abolished.
In the present age of digitisation, there is no need to have requirement of common seal.
Sharing amendments proposed for protection of minority shareholder’s rights, the SECP chairman stated that the discovery of any documents from the defendant during court proceedings; threshold for member resolution proposed to be reduced from 10 to five percent, disclosure of individual directors’ remuneration, and court may declare those contracts void that are prejudicial to the interest of members or suffers from conflict of interest on the part of any director or board.