ISLAMABAD, March 7: The Securities and Exchange Commission of Pakistan (SECP) has prescribed a checklist to be filled in by the secretary/chief executive officer of all the non-bank financial institutions (NBFIs) about their directors to ensure that they fulfil all the conditions necessary for proper discharge of their functions.

Applicable to all the present and future directors of the NBFIs, Haroon Sharif, a senior SECP official, told Dawn the purpose was to ensure that the directors comply with the Code of Corporate Governance and the NBFI rules the commission will enact soon. Similar checklist is likely to be enforced separately for the Modaraba companies.

The State Bank of Pakistan already prescribed such a checklist for the banks a couple of months ago.

The NBFIs, including leasing companies, mutual funds, discount houses, investment banks, venture capital companies, housing finance companies, etc., were transferred to the regulatory oversight of the SECP last year.

While the companies can appoint the directors without the SECP’s approval, the NBFIs need its approval in the case of their directors. In view of the sensitive nature of their functions — raising of capital from the general public — the SECP deemed it essential to bind the secretary/ CEO to ascertain the qualifications, personal record and competence of the directors of the NBFI concerned.

Various categories of the NBFIs are also subject to a checklist specific to each. But these did not include numerous provisions of the Code of Corporate Governance. Questions based on the code and other questions pertinent to the operation of NBFIs in accordance with the legal, financial and ethical principles, which were absent in the old checklist, have now been included in the new checklist.

In signing it, the secretary/CEO of an NBFI will have to certify that the persons, serving or being appointed as director is not a tax defaulter, was not convicted by a court as a defaulter, nor he/she is a member in default of any of the stock exchanges in Pakistan.

Another new provision in the list is that such a person is not serving on the boards of ten other listed companies and that he himself or spouse are not involved in business of stock brokerage.