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ISLAMABAD: The Senate passed the Corporate Restructuring Companies Bill 2016 on Thursday. It had been earlier passed by the National Assembly.
The bill provides for the establishment, licensing and regulation of corporate restructuring companies and the manner in which they can carry on business.
The bill was drafted by the Securities and Exchange Commission of Pakistan after extensive consultations with the stakeholders.
The SECP has said that an independent and comprehensive legislation in this regard was needed as various provisions related to the matter are present in different regulations.
Among the functions of the Corporate Restructuring Company is to acquire, buy, hold, manage, restructure, reschedule, resolve, settle, recover, assign, transfer and dispose of non-performing assets.
Earlier the legislators were concerned that the law would empower the banks to dispose of the assets of financially distressed companies and not given them a chance to recover.
However, the law has barriers and checks over the Corporate Restructuring Companies (CRCs) as they cannot involve in speculative transactions, circumvent fair valuation and proper appraisal of non-performing assets ad the collateral. The CRCs can be established with the prior approval of the SECP.
The CRCs will also have the rights to enter partnerships, joint venture, profit-and-loss sharing arrangements with the distressed companies.
An official of the SECP said that the bill would eventually help both the banking sector and the companies that face genuine financial crisis.
“There are instances that financial distress are deliberate but that is a different matter, this law relates to the concerns which are in financial crisis but they are serious to overcome the distress,” the official added.
The Senate also approved the Foreign Exchange Regulation (Amendment) Bill 2016 that is the amendment of the Foreign Exchange Regulation Act 1947.
The third bill approved by the upper house Thursday was ‘The Financial Institutions (Secured Transactions) Bill 2016.
The finance ministry has claimed that the Financial Institutions (Secured Transactions) Bill 2016 will help access to credit for small borrows, including the SMEs, micro-businesses and agri-borrowers.
The bill will help clarify and expand the meaning and scope of movable property by providing general principles in relation to creation and perfection of security interest over movable property.
Published in Dawn, June 17th, 2016
