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Beneficial ownership declaration limit increased to 10pc

Updated November 04, 2018

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SECP has increased the limit for declaration of beneficial ownership in an effort to streamline ownership information.— Reuters/File
SECP has increased the limit for declaration of beneficial ownership in an effort to streamline ownership information.— Reuters/File

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has increased the limit for declaration of beneficial ownership to 10 per cent in an effort to streamline ownership information.

The amendment has been made to circular number 16 issued on August 29 whereby all companies having legal persons as their members/shareholders were required to maintain up-to-date information relating to their beneficial owners.

The circular mandated that the information must be obtained and maintained — irrespective of the number of levels of ownership pattern — until the natural person exercising ultimate ownership or control and lying at the end of the ownership chain is revealed.

“Without any limit, the beneficial ownership is difficult to prove and a huge amount of data is accumulated making the scrutiny and maintenance difficult for the commission,” said an official of the SECP.

The amendment will simplify the data gathering process of persons with 10pc or more shareholding, voting rights, ownership or controlling interest to obtain, maintain and update the ultimate beneficial ownership information.

“This move will also benefit the companies in fulfilling the requirements especially in cases where there are a large number of small shareholders or investors,” the official added.

The move is in line with the Financial Action Task Force (FATF) recommendations, which require application of a risk-based approach for the purpose of compliance with the underlying standards.

The circular is aimed at ensuring compliance with the FATF recommendations, which serve as international standards to combat money laundering and terror financing. Pakistan is a member of the Asia Pacific Group, a FATF-style regional body, and is required to adopt prescribed standards as per membership obligations.

Published in Dawn, November 4th, 2018

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