April 2, 2002	Tuesday	Muharram 18,1423

ISLAMABAD, April 1: The Securities and Exchange Commission of Pakistan (SECP) has launched a “Companies Easy Exit Scheme” (CEES) for those dormant companies that are desirous to get their names struck off the register of companies.

Under the procedure, announced by SECP Chairman Khalid A. Mirza at a press conference here on Monday, the commission would consider applications for winding up companies on the condition that they have neither any business nor any assets and liabilities.

This was part of the commission’s policy of encouraging the corporatization of economy, he said.

To a question, he said in Pakistan there were 692 listed companies, 2,212 non-listed public companies and 39,444 private limited companies. The limited companies play a dynamic role in the economy of a developing country as such companies are part of the organized corporate sector as well as the capital market.

Nevertheless, no concrete efforts were made to assess the actual strength of the corporate sector and identify the active companies. Mirza claims that all matters are now expeditiously disposed of in far less than other countries of the region.

To encourage corporatization of economy, the SECP in October 2000 reduced the rate of registration for smaller companies.

Armed with computerized data, the commission, however, noticed that huge number of companies — around 27,000 — had defaulted in filing of statutory returns. The law takes a serious view of such default, punishable as it is, with penalties, prosecution of management leading to imprisonment and three times additional filing fee.

Since the SECP considers the private limited companies and non- listed companies as nurseries for ultimate listed corporate sector, the CROs were directed to record the statutory returns filed with minor delay without initiating penalty proceedings. A large number of companies benefited from this measure.

From January 1 this year, the SECP launched the Companies Regularisation Scheme under which the defaulter companies were allowed to file the overdue returns by payment of additional fee equal to the normal fee.

To a question, the SECP chief gave the number of companies which had taken advantage of this scheme as 3,500.

As the SECP also tried to contact each and every company, it was flabbergasted to find that as many as 9,000 companies were simply untraceable.

During implementation of the scheme, the SECP received a number of representations that the names of dormant companies should be struck off the register of companies.

In continuation of the effort to strengthen the corporate sector and enable effective monitoring of the companies that are active, the SECP has now embarked on CEES. There already exists a provision under Section 439 of the Companies Ordinance 1984 for removing companies from the register. But the action in such case is initiated by the government, while under CEES, it is the company that will apply for deregistration.

It has been decided that the cost involving publicity and processing of the application and publication of notification in the Official Gazette should be recovered from the applicants, Mirza declared.

The scheme would be operated for a period of one month i.e. April 1, 2002, to April 30, 2002. Rate of application fee for private limited companies would be Rs3,500, while for unlisted public companies associations under section 42 and guarantee companies under section 43 it would be Rs7,500.