The Securities and Exchange Commission of Pakistan (SECP), to facilitate the revival of distressed companies, has notified the Corporate Rehabilitation Regulations, 2019. The regulations, issued under section 41 of the Corporate Rehabilitation Act, 2018 (CRA) broadly cover procedures for maintenance of Penal of Insolvency Experts, manner of determination of remuneration of Insolvency Experts, and Code of Conduct for Insolvency Experts, etc.
The CRA enacted last year aimed at providing companies facing bankruptcy with a legislative scheme to restructure their debts in order to return to productivity. Under the CRA, a company as specified in section 6 or qualifying creditor as defined in section 2(1)(q) thereof may file a petition in the High Court for order of mediation. The Court, after notice and hearing, may pass an order for appointment of insolvency expert (s) from a panel maintained by SECP to act as mediator for acceptance of plan of rehabilitation filed by the company or the qualifying creditor.
Accordingly, as required by the CRA, SECP has notified the Regulations to provide application procedure and eligibility/ineligibility criteria for persons who can apply to SECP for enlistment of their names in the panel of insolvency expert(s) maintained under section 5(1) of the CRA. The Regulations also provide manner of determination of remuneration of insolvency expert (s) and fees and expenses payable to the administrator appointed under the CRA.
Moreover, the regulations in terms of section 5 (3) of CRA also prescribe the code of conduct for insolvency expert (s), that requires such experts to act with integrity, independence and professionalism.