SECP Makes it Mandatory to Obtain Clearance Before Appointing Directors

The Securities and Exchange Commission of Pakistan (SECP) is making it mandatory for securities exchange, clearinghouse and central depository to obtain clearance from the commission, on the fit and proper criteria of the directors prior to their appointment or election of the board of directors.

In relation to his, the SECP has issued SRO 292 (I)/2020 which includes draft amendments to the Central Depositories (Licensing and Operations) Regulations, 2016. The commission has also proposed amendments to the Securities Exchanges (Licensing and Operations) Regulations, 2016 through an SRO 294 (I)/2020.

The securities exchange shall obtain clearance from the commission on the fit and propriety of the directors prior to their appointment or election, as the case may be, on the board of directors of the securities exchange and shall submit confirmation that it has evaluated the persons against the fit and proper criteria as provided under these regulations and has no adverse findings therein.

A securities exchange shall, with approval of its board of directors, constitute a regulatory affairs committee comprising of at least three independent directors and one shareholder director.

According to the SECP, the central depository shall obtain clearance from the commission on the fit and propriety of the directors prior to their appointment or election, as the case may be, on the board of directors of the central depository and shall submit confirmation that it has evaluated the persons against the fit and proper criteria as provided under these regulations and has no adverse findings therein.

Under the revised regulations, at least one independent director shall be present in the meeting of the board of directors of the central depository to constitute the quorum.

Provided that this condition shall not be applicable in the case of the first meeting of the board of directors after the election of directors in which the names of the independent directors are to be finalized for submission to the commission.

The compliance officer shall submit a comprehensive report on a quarterly basis to the board of directors and the commission regarding matters reported during the respective quarter.

Under revised Clearing Houses (Licensing and Operations) Regulations, 2016, the clearinghouse shall obtain clearance from the commission on the fit and propriety of the directors prior to their appointment or election, as the case may be, on the board of directors of the clearinghouse and shall submit confirmation that it has evaluated the persons against the fit and proper criteria as provided under these regulations and has no adverse findings therein.



>