A Corporate Restructuring Company has been empowered to constitute one or more trusts under the Trusts Act, 1882 to acquire non-performing assets from financial institutions.
Under the updated Corporate Restructuring Companies Act, 2016 issued by the Securities and Exchange Commission of Pakistan (SECP) on Friday, a trust constituted may acquire non-performing assets from a financial institution provided that the transfer and assignment agreement shall be entered into by the Corporate Restructuring Company, for and on behalf of the trust.
The management of any trust constituted shall vest in the Corporate Restructuring Company on the terms outlined in the constitutive document of such trust. The trust may be liquidated in a manner as may be prescribed.
A financial institution may appoint a Corporate Restructuring Company as its agent for recovery of its non-performing assets by entering into an agency agreement with such Corporate Restructuring Company on such terms and conditions as may be mutually agreed between them provided that in case of an agency relationship, there shall be no transfer of any non-performing assets to Corporate Restructuring Company, it added.
No Corporate Restructuring Company shall be incorporated without the prior approval of the Commission.
Alongside, no Corporate Restructuring Company shall carry on business unless it is established as a public limited company under the Companies Act and holds a licence issued on this behalf by the Commission and any such licence may be issued subject to such general or special conditions and upon payment of such fee as the Commission may deem fit to impose, it said.
The SECP has issued the revised Corporate Restructuring Companies Act incorporating all amendments and legal changes made during 2022.
