KARACHI, Dec 31: The chairman Securities and Exchange Commission of Pakistan (SECP), Khalid Mirza announced a “Companies Regularisation Scheme” at a press briefing on Monday.

The scheme provides that companies who defaulted in filing of various statutory returns under the Companies Ordinance, be provided an opportunity to regularise their affairs in a period of three months, beginning January 1, 2002, without any penalty.

The SECP chairman who was flanked by Commissioners, Abdul Rehman Qureshi; N.K. Shahani and Shahid Ghaffar and the Executive director, Hayat Jasra, clarified that the Scheme would not be applicable to the 697 listed companies, since the public was involved in those companies. But for the rest of the 2,209 non- listed companies and 39,270 private companies, the Scheme provides this ‘one-off’ opportunity. In reply to a question, SECP chief said that around 40 per cent of those companies were defaulters in the matter.

The SECP chairman stated that services rendered by the Companies Registration Officers (CROs) had been so reformed that a company could now be incorporated within two days.

The SECP chief said that such matters took weeks and months in the past but they were now expedited even faster than in countries in the region. He said that to encourage corporatization of economy, the SECP had in October 2000 reduced the rate of registration fee for smaller companies and the registration fee of companies with authorised capital up to Rs10 million was less as compared to India, Malaysia and other neighbouring countries.

As regards the “Companies Regularisation Scheme”, the SECP chief observed that it had the following features: The defaulting companies would file overdue returns by payment of additional fee equal to the normal fee in addition to normal fee, instead of paying three times additional fee; the companies filing statutory returns under this Scheme would not be adjudicated for penalties under section 476 of the Companies Ordinance; the scheme would be applicable to the overdue returns required to be filed up to Dec 31, 2000, and the scheme would be operative for a period of three months i.e from Jan 1, 2002 to March 31, 2002.

He observed that in the developed/developing societies, ‘limited companies’, are the most acceptable form of business platforms but no concrete efforts were previously made in our country to corporatize the economy and the CROs had been working in typical bureaucratic style.

He stated that during computerisation of companies record, it came to light that many companies had defaulted in the past in filing of statutory returns. He stated that the Law deals with such defaults in a very serious manner, providing penalties, prosecution of management leading to imprisonment and three times additional filing fee. Such defaults could be categorised as of two types: (1) filing of returns with delay; (2) no returns filed at all.

The SECP chief said that the question before the Commission was whether to take a stern view of the defaults, which would have inevitably resulted in huge number of companies going under. “Since SECP considers the private limited companies and public non-listed companies as nurseries for ultimate listed corporate sector in the country, it was decided to take a lenient view in the matter of late filing of returns,” said SEC chairman, adding that through a general order in February 2001, SECP had directed the CROs to record the statutory returns filed with minor delay without initiating penalty proceedings against management.

A large number of companies were benefited through that order, Mirza stated. Now, with this Scheme, the Commission is providing a one-time opportunity to let sponsors/directors of companies who had altogether failed to file the statutory returns, to regularise their affairs and get down to business with total peace of mind.

“On the expiry of the time given for the Scheme, i.e. upto March 31, 2002, the CROs will initiate penalty proceedings as warranted under the law without any exception,” the SECP chief cautioned.