SECP enforces laws to promote compliance, transparency in corporate sectorimizes

Source: The Nation

ISLAMABAD - The Securities and Ex­change Commission of Pakistan (SECP) effica­ciously aided by its cen­tralized adjudication function to promote com­pliance and transparen­cy in the corporate sec­tor. This quasi-judicial arm maintains regulator independence and min­imizes arbitrariness, ad­hering to laws and inter­national best practices.

The SECP effectively enforced its laws in the first half of F\Y 2024-25, deciding 1,849 cases of violations and impos­ing penalties of approxi­mately Rs.962 million for corrective measures.

During July to De­cember, the SECP pri­marily adjudicated cas­es against companies alleged to violate Section 84 of the Companies Act, 2017, which prohibits companies from inviting, accepting, or renewing public deposits, except for banking companies. A total of 11 orders were issued under Section 84, resulting in a penalty of Rs. 581.50 million. Di­rectors of such compa­nies were also disqual­ified from holding the office for five years using powers under 172 of the Companies Act, 2017.

In addition, a penal­ty of Rs. 1.750 million was also imposed by 11 orders against listed companies for violating Section 199 of the com­panies Act, which only allows companies to in­vest in their associated companies or undertak­ings only under special resolution.

Another area of focus was digital lending. The adjudication division is­sued seven orders, im­posing a penalty of Rs. 13.265 million under Section 282 of the Com­panies Ordinance, 1984, based on observations of various non-compliances with relevant laws.

Moreover, 21 orders were issued under SECP AML/CFT Regulations 2020 for alleged contra­ventions of mandatory AML/CFT regulations, including deficiencies in KYC/CDD processes, customer identity veri­fication, risk categoriza­tion, unapproved AML policy documents, and Targeted Financial Sanc­tions obligations. The total penalty imposed was Rs. 14.66 million.

Five orders w ere is­sued for non-disclosure of substantial acquisition in voting shares of listed companies, and a penalty of Rs. 1.2 million was im­posed under the Securi­ties Act, 2015 for contra­ventions. In compliance with Section 96 of the Securities Act of 2015, a fine of Rs. 500,000 was levied for failing to dis­close price-sensitive in­formation.

Moreover, 45 orders were issued for filing substantial shareholding and directorship chang­es in listed companies under the Reporting and Disclosure (of Share­holding by Directors, Ex­ecutive Officers and Sub­stantial Shareholders in Listed Companies) Regu­lations, 2015, and a pen­alty of Rs. 737,500 was imposed under the Secu­rities Act, 2015.

Adjudication pro­ceedings in respect of 8 cases were initiated against insurance com­panies/ takaful opera­tors. Amongst the main violations of the insur­ance regulatory frame­work were failure in maintaining proper books of accounts in vi­olation of section 34 and 45 of the Insurance Ordi­nance, 2000, inadequate amount of collateral in respect of insurance guarantees in contraven­tion of the Credit & Sure­tyship (Conduct of Busi­ness) Rules, 2018 and non-payment of annu­al supervision fee in vi­olation of Section 11(3) of the Insurance Ordi­nance, 2000.

SECP remains commit­ted towards an effective, transparent & rigorous enforcement of its ad­ministered laws in the future while simultane­ously continuing on the path towards digitiza­tion & promoting an en­abling environment for the businesses.