ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has imposed penalties of up to Rs5 billion on companies involved in fraudulent activities, apart from debarring their sponsors from becoming directors of any other company or incorporating any new company, in the previous fiscal year (FY21).

The SECP enhanced its enforcement regime and allowed winding-up proceedings against 22 companies during the year, the regulator’s annual report 2020-21, released on Saturday, said.

SECP Chairman Aamir Khan has highlighted in the report that the key focus during the year was the need for accountability and transparency.

The SECP centralised its function of supervision and strengthened its litigation team to further SECP’s ability to operate as a focused, transparent and accountable regulator.

“Whereas for the current fiscal year, the SECP will move further towards a functional-based structure, the SECP will centralise its licencing function,” Mr Khan said.

He added that the foremost focus will remain on continuous improvement of the enforcement regime through up-skilling the workforce, using technology and strengthening the litigation function.

The annual report covers the reforms undertaken with the objectives of ensuring effective enforcement, improving access to finance, encouraging capital formation, simplifying regulatory processes, and reducing the cost of doing business.

During FY21, the regulator focused on ensuring consistent, more transparent, and focused regulatory oversight across sectors.

The SECP established a centralised supervision division to adopt an integrated enforcement strategy and uniform decision making.

While FATF Asia Pacific Group (APG) assessors found Pakistan to be largely compliant with all SECP relevant 54 MER 2019 recommended action items.

In order to improve access to finance for SMEs and startups, SECP notified amendments to the Companies (Further Issue of Shares) Regulations to enable private companies to raise capital by receiving immovable property, intangible assets, and services from potential investors.

To promote investment in the real estate sector through Real Estate Investment Trusts (REITs), SECP revamped the regulatory framework of REITs and introduced a new Public Private Partnership (P3) model.

The major revamp led to approval of the first sharia-compliant Developmental REIT Scheme. In addition, during the year, licences were granted for three housing finance companies; two investment finance services, and a microfinance services company.

In November 2020, the SECP registered Pakistan’s first collateral management company (CMC), whi­ch will provide storage and preservation services for a range of agricultural commodities. The CMCs issue electronic warehousing rece­ipts (EWR) against commodities. The EWR can be traded electronically and used to obtain loans from banks.

The SECP also implemented several reforms for the development of the capital market and increased the investor base.

The market-related reforms incl­u­ded the introduction of a framework for corporate debt and government debt securities; introducing the concept of direct listing at PSX to facilitate listing of SOEs; regulatory frameworks for debt and hybrid ETFs; and the introduction of “90-Day Deliverable Futures Contracts.”

Published in Dawn, May 22nd, 2022