ISLAMABAD: The Securities and Exchange Commission (SECP) of Pakistan is developing a ‘Global Register of Beneficial Ownership’ aimed at maintaining transparency in records and addressing illicit financial flows which are mostly related to corruption, money laundering and terrorist financing.

Addressing a press conference on Friday, SECP Chairman Zafar Hijazi said the commission was facing criticism from political circles for not doing anything against counter parking of investments through off-shore companies.

“We have catered for these provisions under the new Companies Ordinance 2016 and the provisions of Section 452 relates to Companies Global Register of Beneficial Ownership,” Mr Hijazi said.

He added that after the Companies Ordinance, the SECP has been empowered to seek details of beneficial ownership of directors having 10 per cent or more shares in a foreign company.

To develop the database in Pakistan, the SECP has sent around 70,000 notices to registered companies and many of them have reported back too, he added.

“There are around 63,000 local companies, around 9,000 foreign companies including off-shore companies are incorporated in the country, whereas few thousand companies are dormant,” Chairman SECP said.

He added that apart from multinationals, around 1,500-2,000 companies might have directors with investments or they are owned by Pakistanis.

“These are some entities that have been established by Pakistanis abroad and they have incorporated these companies in the name of some other person,” he said.

Meanwhile an official of the SECP said that such companies are usually established with grey or black money.

Responding to a query about the powers and capacity of SECP to detect if the response by the companies was correct of not, Chairman SECP said that the commission would not hold inquiries over every reply.

With a data base in place, there would be criminal punishments against false statements as stated in the Companies Ordinance 2016, Mr Hijazi added.

He added the commission shall keep record of the information received in a Company’s Global Register of Beneficial Ownership, and it would be helpful in streamlining the investments.

SECP officials said that recently the prime minister of UK advised all foreign companies in United Kingdom to report their foreign shareholding to the newly introduced public registers of beneficial required ownership.

The officials said that other countries including France, Netherlands, Nigeria have also agreed to launch their own public registers of true company ownership.

Meanwhile answering another query that this provision should have been incorporated in Tax Law instead of the Corporate Law, Mr Hijazi said that in Pakistan, the numbers of registered tax payers are very low in number compared to the number of companies registered and the investments were made in the name of companies rather than the individuals.

Published in Dawn, December 3rd, 2016