SECP Slapped Rs. 4.7 Billion in Penalties on Unlisted Companies in FY22

The Securities and Exchange Commission of Pakistan (SECP) issued 85,519 orders to unlisted companies, imposing penalties amounting to Rs. 4.7 billion in the fiscal year (FY) 2021-22.

The annual report released by the SECP for FY2021-22 detailed commission activities and financial statements. As per the report, building on the initiatives of the previous fiscal year of the establishment of a dedicated supervision division and a dedicated adjudication division, the SECP concluded 579 cases through orders imposing penalties amounting to Rs. 77 million on listed companies and licensed entities on account of violations of relevant laws.

SECP Chairman Aamir Khan has expressed his satisfaction that the commission has achieved significant progress in multiple areas, including transparent and fair enforcement, promoting ease of doing business, supporting innovation and entrepreneurship, financial inclusion, and market development.

In his message, the Chairman said that in pursuit of developmental reforms, “the over-arching enablers were identified as promoting digitalisation, simplifying regulatory structure, reducing cost of compliance and invigorating the exchange of ideas and concepts with market participants and stakeholders.”

This year, while moving further towards a functional-based structure, the SECP has successfully consolidated its licensing activity under a centralized department. The centralization of licensing will bring uniformity, efficiency, and transparency to the issuance and renewal of licenses and related approvals.

Digital initiatives

Other significant progress includes the issuance of a digital company profile. To facilitate easy exit, an online portal “Companies Easy Exit” has been launched. Moreover, the process of company incorporation has been centralized at the head office to standardize and facilitate expeditions processing. The SECP, in coordination with the State Bank of Pakistan (SBP), has also launched an exclusive digital portal that enables banks to certify a company’s filings.

Reforms in capital market

In FY22, numerous reforms were introduced in the capital market to bring efficiency, transparency, depth, and ease to investors. The process for submitting IPO applications by the issuers and companies has been automated. The opening of new accounts by small investors was made very simple through a new category of “Sehl Account,” wherein investors can be onboarded through microfinance banks backed by telecom providers.

Further, to simplify investment in mutual funds, Pakistan’s first mutual fund digital distribution platform, namely “Emlaak Financials,” has been launched by the Central Depository Company (CDC).

The pension funds have been allowed to invest in Real Estate Investment Trusts (REITs), Private Equities, Venture Capital Funds, and Exchange Traded Funds (ETFs). Moreover, pension funds have also been allowed passive investment strategies in the form of Index sub-fund.

Additionally, financial institutions, including Banks, Development Finance Institutions (DFIs), Primary Dealers (PDs), Asset Management Companies (AMCs), etc., have been allowed to act as market makers, thereby increasing secondary debt market liquidity. So far, 16 financial institutions have been registered as market makers.

For the first time, the SECP has awarded a Non-Banking Finance Company (NBFC) license to operate as a P2P lending platform on a commercial basis. The person-to-person (P2P) operations of the NBFC were successfully tested under SECP’s regulatory sandbox.

WhatsApp and WeChat services

To provide immediate responses and guidance regarding company incorporation, the SECP has launched WhatsApp and WeChat services. Through the service, which is the first of its kind in Pakistan’s public sector, the SECP has handled 29,681 queries during FY22, with a satisfaction ratio exceeding 89 percent.

The SECP also handled 10,204 complaints through its digital complaint dashboard, Service Desk Management System (SDMS), out of which 9,761 or 96 percent stand resolved or closed, and the remaining are at different stages of being addressed.

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