ISLAMABAD: The federal government has further amended the Companies Act 2017 and withdrawn several amendments inserted in the ordinance on April 30, which include clauses related to disqualification of persons who enter into plea bargain with the National Accountability Bureau (NAB).
The amendments that have been reversed through the Companies (Amendment) Ordinance 2020 include Section 172(m), Section 181, Section 186 and 187, Sections 279 to 282 and Section 452, besides an amendment to Section 461.
A senior official of the finance ministry said these amendments were made in April to provide ease of doing business, promote start-ups and facilitate access to finance to small and medium enterprises, with an aim to meet World Bank’s ease of doing business indicators.
Most of these 121 amendments were recommended by the then chairman of the Securities and Exchange Commission of Pakistan (SECP)’s Policy Board Khalid Mirza, who maintained that many clauses were duplication of laws and the laws had to be trimmed to reduce bureaucratic channels.
However after facing criticism from several quarters the government decided to withdraw several amendments and the new ordinance was promulgated.
These amendments include Section 172(m) that has been restored to the original. It is related to disqualification of a person from holding the office of a director of a company who has entered into plea bargain with NAB.
Section 172(m) was included in the Companies Act in 2017 to enable the SECP to pass disqualification order for a maximum period of up to five years against such a person from holding office of director in a company.
Section 181, which has also been reverted, is related to protection to independent and non-executive directors of a company. This section was introduced in 2017 to protect independent and non-executive directors from acts, omissions and commission which occurred without their knowledge or consent. The SECP had recommended removal of this section on the grounds that all the directors making decision should be treated equally.
Through the change in Section 452, the Companies’ Global Register of Beneficial Ownership has been reverted.
The SECP through an earlier amendment had made Section 452 less stringent as the requirement for a company’s directors, shareholders or officials to report their shareholdings or any other interest in a foreign company was reduced to only those who may have shareholding of 10 per cent or more in a foreign company or corporate body.
Through an amendment, Section 186 that reduces the powers of the federal government to appoint first chief executive officer of a public sector company has also been restored.
Published in Dawn, July 10th, 2020
