ISLAMABAD, Dec 6: The Securities and Exchange Commission of Pakistan (SECP) has appointed S. Tariq A. Husain as the commissioner of the newly-established Legal Department with prime objective of removing irritants in the way of ADB-funded second generation capital market reforms.
The commissioner has been assigned with the task of finalising the Financial Services Commission Act and the much-needed amendments to the company laws.
Sources told Dawn that the Legal Department, which till recently was a wing of the Specialised Companies Division, would now be headed by Mr Hussain, who has just arrived from Kuwait where he worked with the Kuwait Oil Company (KOC) in the capacity of a senior legal specialist.The Legal Department will also analyse the concept paper prepared by the Companies Law Review Commission headed by the deposed Chief Justice of Pakistan Iftikhar Mohammad Chaudhry.
Pakistan has requested for $400 million loan from the Asian Development Bank to support its second generation capital market reforms under which the SECP will be converted into the Financial Services Commission of Pakistan (FSCP) by bringing changes in the law through parliament.
The legal department is now assigned to give all legal helps to the commission in finalising the Financial Services Commission Act and some other rules.
The bank has accepted the loan request of the government on the condition that SECP has to be mandated with adequate legal powers and responsibilities for the regulation and supervision of the securities’ markets and intermediaries, private placements, public offers of listed and unlisted securities, corporate governance practices and related matters in line with best international practices.
The new securities law would grant the SECP to require a unified national market system in securities that may include one or more securities exchanges and alternative trading platforms. Such a national market system can be created through systematic exchange of information between various trading platforms in combination with legal and regulatory requirements for brokers.
The ADB is of the view that securities market legislation is weak in Pakistan. The 1969 Securities Ordinance has been frequently amended over time, but is still outdated in some major areas. Among its many weaknesses, it fails to provide SECP with sufficient investigative and enforcement powers (not addressed by the 1997 SECP Law) and lacks provisions governing important areas and aspects of modern securities markets, such as collective investment schemes or various levels of commitments for underwriting securities.
The bank says the 1969 Securities Ordinance does not clearly define the concepts of private placement and public offers, and focuses on the regulation and supervision of stock exchanges and listed companies rather than public companies and public securities (whether or not they are listed).
Similarly, the ADB has highlighted a number of legal challenges being faced by the SECP and the newly-established Legal Department is supposed to come up with legal services to not only satisfy the donor but also to legally empower the SECP and pave the way for converting the commission into the Financial Services Commission of Pakistan.