ISLAMABAD, Feb 4: The number of new companies registered by the Securities and Exchange Commission of Pakistan (SECP) increased by 31.28 per cent, rising to 1,553 during the year 2003-04.

According to the SECP's Annual Report, these included 1253 companies limited by shares, 44 public limited and 1,409 private limited companies, denoting a growth rate of 28.91pc and 57.24pc over 2002-03.

The period under review was marked by amendments in the Companies Ordinance, 1984, allowing the incorporation of single- member companies (SMCs). Within that period, the Commission incorporated 46 SMCs. Of these, 41 belong to Punjab, 4 to Sindh, only one to NWFP and none to Balochistan.

Nevertheless, the report shows decline in the registration of new foreign companies (FCs). While in 2002-03, 39 new FCs had been registered, the number of new FCs registered in 2003-04 dropped to 26.

Nevertheless, a significant event of the year was the liquidation/de-registration of 3,977 companies, which offset the new entrants into the corporate sector.

Thus the total number of companies at the end of 2003-04 registered with the SEC stood at 41,828. This includes 22,403 companies in Punjab, 16,476 in Sindh, 399 in Balochistan and 2,550 in NWFP.

In this regard, the Commission had launched Companies Easy Exist Scheme to enable dormant companies to have their names struck off the register of companies.

Under a voluntary scheme, a total of 2,860 companies were deregistered. Under the criteria for exit set by the commission, the scheme was applied to the companies that were neither doing any business nor had any assets or liabilities, as supported by board resolutions and auditors' certificates.

Another 1,117 companies were removed from the register of companies in 2003-04 under Section 439 of the Companies Ordinance. This section empowers the Registrar to remove a company when it is found that it is not carrying on business or is not in operation.

During the year under review, the Company Law Division (CLAD) filed oral and written representations in respect of 36 cases of mergers in the Court. Of these, 22 cases were decided by the court.

However, the issue of the winding up of Taj Company Limited involving the savings of thousands of people remained in abeyance even during 2003-04. The Supreme Court had vacated on June 13, 2003, its own stay order against its winding up. But then the Administrator of Taj Company obtained stay from the Lahore High Court against liquidation proceedings.

To ensure that the official liquidator carries out liquidation diligently, the SECP got the company law amended whereby one person would not become liquidator of more than three companies at a time. Furthermore, the liquidator is required to complete his work within the prescribed time, failing which remuneration would be denied to him.

In accordance with the policy of facilitating the corporate sector, the SECP granted permissions and approvals in 15,631 cases in response to applications by the companies.

Besides, the Registrar of Companies and the Executive Director, CLAD, adjudicated 4,956 cases relating to violations of various provisions of the company law. The commission also disposed of 87 cases pertaining to the liquidation of companies.

The SECP, since its inception in 2000, has brought about sweeping changes in the company law to improve corporate governance, documentation of the economy, enhance transparency and measures to safeguard the interests of small investors.

During the year under review, complaints against 67 companies were received by the Company Registrars and the CLAD at Islamabad from shareholders and the general public. The complaints related, among other things, to disputes in shareholding, ownership of the company and removal of directors by one group of the company. All the complaints were satisfactorily disposed of, according to the SECP report.

In order to ensure better compliance by companies with statutory requirements of the Companies Ordinance, the Defaulter Companies Action Programme was launched on May 1, 2003.

Under this programme, a total of 2,116 companies were identified as defaulters. These included 1,233 non-listed public companies, 334 associations not-for-profit, 108 listed companies and 441 foreign companies. But to encourage them to regularise their defaults, the SECP also absolved the companies which had filed statutory returns up to December 31, 2002.

In order to facilitate the investors and general public, the commission has undertaken a number of measures, including the introduction of online search facility for availability of company's name, publication of Promoter's Guide for incorporation of a company, accessibility to statutory forms and schedule of fees payable to the Registrar and the Commission through website, etc.

Another development of 2003-04 was the modernization of company registrar offices for prompt provision of services to the companies.