ISLAMABAD: Corporate culture needs to be developed to attract foreign investment and improve Pakistan’s ranking in the ‘ease of doing business index’, but this needs structural support, Finance Minister Ishaq Dar said on Saturday.

He was addressing a seminar on the Draft Companies Bill 2016 organised by the Securities and Exchange Commission of Pakistan (SECP).

“The new companies’ law is important as it is going to cultivate corporate culture, encourage investments, raise foreign direct investment (FDI) inflows and would have a positive impact on the economy,” the minister said.

The minister suggested the draft bill may be delayed by another one month to make the new law comprehensive in consultation with all stakeholders.

“The issue of ease of doing business is a serious matter and the federal government has formulated two committees in this regard to assess the causes which needed rectification,” he said.

Pakistan ranks 138th in the ease of doing business by the World Bank’s report, the minister said. He highlighted there were 12 parameters related to the issue and six of them related to the federal government while six are under the jurisdiction of provinces.

“We have decided to correct at least the federal part, and the results are expected soon,” he said.

The seminar focused on bringing awareness about the important and salient features of the Draft Companies Bill 2016 which is the upgraded version of the Companies Ordinance 1984.

The major focus of the Draft Companies Bill is facilitation to the corporate sector and other stakeholders as per the modern requirements along with strengthening the regulatory framework.

The main features of the draft bill include the incorporation of technological advancements by allowing communication between a company and its members, while persons attending the meeting through video link would be counted in the quorum of general meeting.

A special provision for small and medium companies includes exemptions from general meeting or board meetings for companies having one member and one director.

There is a new provision for disqualification of a director through court for a period of five to 10 years on various grounds such as persistent breaches, fraud in winding-up, insolvency of a company where he/she had been a director and conviction of offence in connection with the promotion, management or liquidation of a company.

One of the most significant changes, in line with the other jurisdiction, is that except for prohibited and specialised businesses, the companies shall be allowed to engage in all lawful businesses.

In view of the growing demand for Islamic finance, the concepts of ‘shariah compliant company’ and ‘shariah compliant security’ are being introduced in the new law.

INGOs regulation

The finance minister said a new law is in the offing to strictly regulate and monitor the operations of International NGOs (INGOs).

“There is a strict law in India too in this regard and we need to look into things from our perspective — this is what everybody needs to understand including those who raise hue and cry whenever this issue is taken up,” Dar said.

He said a vast majority of INGOs were serving in accordance to their objectives but a small percentage of them had doubtful and shady operations.

The INGOs are registered in the SECP as companies ‘not for profit’. Currently the commission is streamlining its own record and licences of around 200 INGOs have been revoked in one year.

Published in Dawn, March 27th, 2016