ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has notified new rules relaxing the mandatory requirement for appointment of a legal adviser for small companies.
Earlier the companies having a paid-up capital of Rs0.5 million and above were required to appoint a legal adviser to advise such companies in the performance of their functions and the discharge of its duties in accordance with the law.
The SECP has notified that the threshold of paid-up capital for companies to appoint their legal adviser has been increased to Rs7.5 million.
“The requirement of appointing a legal adviser for the small companies was a major hurdle in their corporatisation,” said an official of the SECP.
“This decision to have legal adviser for all the companies made in 1974, was possibly a political decision or a need of that time but relaxing this condition is the need of current times.”
The SECP had initiated amendment to the Companies (Appointment of Legal Advisers) Act 1974, and the Companies Appointment of Legal Advisers (Amendment) Act 2017 has been approved by the parliament and promulgated by the president. Now 10,200 companies are required to appoint legal adviser and around 30,000 companies have been relieved from this regulatory burden through this initiative.
The move will support the small-sized companies in terms of financial saving and operating hassles related to appointing legal advisers.
The penalty for contravention of the Companies (Appointment of Legal Advisers) Act, 1974 was imprisonment and the decision in this regard was to be taken by the courts.
Whereas, after the amendment the SECP has been empowered to impose penalty for contravention of the provisions of the law, which is likely to save time and money for the companies that have been penalised.
Published in Dawn, March 18th, 2017