Companies Ordinance 2016 promulgated

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SECP empowered to probe money laundering, offshore investments, terror financing

Zahid Chaudhary

Islamabad—President Mamnoon Hussain has promulgated the Companies Ordinance 2016 in order to replace the Companies Ordinance 1984. The new ordinance emphasizes maximum disclosures by Pakistanis to the local regulatory authorities in respect of investment in foreign companies. It also provides facilitation and regulation of Public Sector Enterprises.
Under the Companies Ordinance, 2016, the Securities & Exchange Commission of Pakistan (SECP) will maintain a 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. Moreover, it will be binding on the foreign company operating in Pakistan to provide complete information of its directors, officers and/or beneficial owners.
In order to ensure adequate measures against fraud, money laundering and terrorist financing, Companies Ordinance, 2016, empowers the SECP to investigate and also conduct joint investigation. Furthermore, provisions requiring officers of a company to take adequate measures to curb such violations have also been included.
Commenting on the ordinance, Finance Minister, Ishaq Dar, said that the Companies Ordinance, 2016, has been promulgated, after extensive consultations with all stakeholders, in order to encourage and facilitate best international corporate practices in Pakistan.
The Companies Ordinance, 2016, contains provisions for simplifying procedures 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.
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 for providing enhanced protection to the investor.
Furthermore, the Companies Ordinance, 2016, provides protection to independent and non-executive directors to encourage inclusion in the board, as well as provisions for manner of selection and maintenance of data bank of independent directors. It aims to address the issues relating to protection of interest of minority shareholders and creditors.

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