Brokerage houses have been issued warning letters by the SECP for unauthorized deposit-taking.
It is the moral, ethical and licit duty of a broker to comply with the Companies Act which has been imposed by the SECP. Certain unauthorized deposit-taking does not comply with the Act.
The SECP stressed that accountancy professionals are to follow the rules as laid down in the Company Act. The Act’s main objective is to serve as a piece of regulation and brokers could do well enough to be acquainted with it.
“This act of brokers is not only in contravention of the Companies Act 2017 but also against the Securities Act 2015 as deposit-taking is not a permissible activity for a broker under the Act,” – SECP
To protect the public interest, all the brokers, their representatives and agents are required to comply with the following:
A broker and/or their representing agent shall not accept any sort of deposit, money or borrow from any person, individual or any constituent of public and sponsors including their representatives and/or agents unless;
The broker and the loan provider must sign a formal written agreement which also underlines terms of repayment and repayment schedule.
However, finance may be accepted from the broker’s customers but only for trading purposes if that customer’s UIN is already mapped in NCCPL system.
No rate of return shall be given to the customer as a part of reduced commission structure.