The Securities and Exchange Commission of Pakistan (SECP) has directed Modaraba companies that independent directors shall be selected from the data bank of the institutions/bodies notified by the Commission.
Through an SRO issued by the SECP on Wednesday, the commission has proposed draft amendments to the Modaraba Regulations, 2021.
Under the revised regulations, a Modaraba company shall ensure compliance while appointing independent directors to its board. An independent director shall be selected from the data bank of the institutions/bodies notified by the Commission following section 166 of the Companies Act, 2017.
The regulations further revealed that all advertisements for any invitation for investment in COM, either through advertisement by print, electronic, or social media outlets or any other form or channel to the public or through private placement shall at the minimum contain the following information:
- credit rating of the modaraba, the name of the rating agency, the date on which the credit rating was issued;
- minimum and maximum tenor of the COM;
- expected profit rate to be paid on the COM;
- All advertisements for inviting a person to invest in a COM scheme of a modaraba must contain the following disclaimer: “The COM of modaraba are subject to various risks including credit and liquidity risk. The prospective investors are advised to conduct their own due diligence prior to investing in COM of the modaraba”, development, or construction purposes, where such a purpose or objective is provided in the approved prospectus of a modaraba, it added.