ISLAMABAD, June 3: A total of 2,788 companies applied for de-registration under the Companies Easy Exit Scheme (CEES) launched by the Securities and Exchange Commission of Pakistan for companies which were not doing any business and were without any assets and liabilities, according to an official source.

Karachi, not unexpectedly, leads all other cities in the number of companies seeking exit — 1,213. From Lahore, 863 companies had applied for de-registration, followed by 265 companies registered in Islamabad which would like to be struck off the companies register.

The SECP had launched the scheme on April 1 and set May 31, 2002, as the deadline for submission of applications.

The SECP staff had started receiving applications at the outset and had been busy processing and scrutinizing relevant record. Accordingly, the commission has thus far notified the names of 1,542 companies for public information.

The objective, SECP commissioner (company law) Zafarul Haq Hejazi told Dawn here on Monday, was to provide to the interested parties, if any, an opportunity to file their objections to the de-registration of respective companies.

The remaining applications would similarly be notified in due course of time. The objections, if any, are to be sent to the SECP within three months.

Explaining the rationale of the scheme, Mr Hejazi said out of 43,000 registered companies, the number of companies that were mostly dormant was as high as 26,000.

Nevertheless, the companies registration offices as well as the SECP have to maintain their record, necessitating an expenditure of time and capacity that would be utilized much better in monitoring the companies that are active and facilitating better corporate governance.

The commission, moreover, had been receiving requests from the corporate sector to facilitate the exit of companies that were not functioning. In fact, many companies are simply untraceable at the addresses given by them.

Surprisingly, however, the number of companies that have come forward to volunteer their demise, is much lower than expected. In this connection, another senior SECP official said, around 5,000 companies had been extended to avail themselves of the CEES.

The small number of companies that have sought exit may mean that many companies, apparently non-functional though, were unable to fulfil the conditions laid out by the commission to qualify for the scheme — namely, no assets and liabilities.

Certificates to this effect were to be attested by a chartered accountant or cost & management accountant and signed by the chief executive of the company concerned and supported by the resolution passed by its board of directors or a resolution of its shareholders.