KARACHI, Jan 8: The Securities and Exchange Commission of Pakistan (SECP) announced on Tuesday that a total of 836 companies had been registered during the final quarter of the calendar year 2007, the major chunk of which fell in the ‘services’ sector.

The commission appeared to take pride in having expanded the corporate portfolio to 50,847 registered companies and bringing a considerably large number of 4,841 companies under the corporate fold. Be that as it may, two important points merit attention.

One, that among the companies registered in 4Q07, the largest number of 147 fell in the ‘services’ category, which was almost five times, the 30 companies that entered the ‘textile sector’. An indicator, perhaps, of the worrisome trend of entrepreneurs to shy away from long-term objective of putting money in setting up industries, in favour of a quick ‘wrap and pack’ services sector.

And second that during the year, only 14 of the 4,841 registered companies sought listing at the stock exchanges. The oft repeated reasons being no tax incentive for a listed company over an unlisted entity and the hassle of compliance by the former with the complicated and laborious sections of the ‘code of corporate governance’.

Companies registered by the SECP during 4Q07 on other counters also portray an interesting trend: The ‘services’ sector was followed by the trading sector, which registered 116 new companies; 62 companies were incorporated in tourism sector, 56 each in construction and communication, 42 in information technology, 35 in broadcasting and telecasting and last and the least 30 in textile sector.

The commission observed that of the 836 companies registered during the quarter, 819 were limited by shares, comprising 22 public unlisted companies, 761 private companies and 36 single member companies. In addition, eight foreign companies and nine associations not-for-profit were also registered.

Aggregate authorised and paid-up capital of the 836 companies limited by shares registered during the quarter amounted to Rs8.25 billion and Rs2.18 billion, respectively.

“The SECP encourages corporatisation of businesses to contribute towards the progressive development of the economy and healthy growth of corporate sector of the country”, the commission declared in a statement issued on Tuesday.

It might be difficult to dispute that noble objective of the SECP. But being the front line regulator, the onus of pleading the case with the government for grant of incentives for larger number of registered companies to seek listing at the stock exchanges also falls on the commission.

A quick glance back to June 30, 2004 shows registered companies then totalled 43,700 which have increased by a huge number of 7,147 to 50,847 today. But for the investors in equities that is not of much moment for only 59 of those offered shares to the public including 14 during 2007.

Let the commission take upon itself the task of broadening the base of the equity market. Coaxing entrepreneurs to have faith in the motherland and invest in industrial sector could be left to the government. But for the government that perhaps would have to wait until more pressing issues of governance have been successfully addressed.