The Securities and Exchange Commission of Pakistan (SECP) has clarified that the mere registration of a company with it does not authorize the latter to seek deposits from the general public.
Deposit-taking by companies (other than banking companies) is illegal in accordance with Section 84 of the Companies Act, 2017. Furthermore, financial services including car financing, leasing, acceptance of deposits, house financing, etc., can only be offered by specialized companies with valid licenses and regulatory approvals.
The general public has been advised to be wary of and not to deal with or invest in the illegal schemes offered by companies involved in illegal deposit-taking, unauthorized investment, or Multilevel Marketing (MLM).
While exercising its regulatory powers to curb the practice of illegal deposit-taking in the country, the SECP has taken strict action against the Shaukat Marwat Group comprising the following companies that were found to be involved in illegal deposit-taking:
- Shaukat Marwat Group of Companies (Private) Limited
- Shaukat Marwat Estates and Builders (Private) Limited
- Shaukat Marwat Transports (Private) Limited
- Shaukat Marwat Imports/Exports (Private) Limited
- Shaukat Marwat Restaurants (Private) Limited
- Shaukat Marwat Hotels (Private) Limited
The SECP had observed that the aforementioned companies have been using their registrations with it and the Federal Board of Revenue (FBR) to win the confidence of the public while soliciting financing through unauthorized investment schemes through Facebook groups and posts on social media.
The SECP has issued a directive under Section 474 of the Companies Act, 2017 to these companies to warn them to refrain from soliciting deposits and to refund the amounts collected from the general public. It has also initiated penal action under Section 84(2)(b) of the Companies Act, 2017 against the companies for the invitation of deposits from the public and the disqualification of directors/CEO for illegal deposit-taking under Sections 172 and 189 of the Companies Act, 2017.
It has also told the concerned regulatory authority and law enforcement agencies to take appropriate action against these companies.
The SECP has made public a list of the companies that are involved in similar unauthorized business activities, including illegally collecting deposits from investors with false promises of exceptionally tantalizing returns. The list of these companies has been posted on its official website.
Complaints or evidence against companies involved in unauthorized activities and illegal deposit-taking may be emailed to [email protected].