The Securities and Exchange Commission of Pakistan (SECP), to strengthen the risk mitigation framework and enhance transparency in the approval process, has prescribed fit-and-proper criteria for the key executives, including promoters, major shareholders, board members, directors, and CEOs of corporate restructuring companies (CRCs).
The Circular, available on SECP’s website, outlines that an individual’s fitness and propriety will be evaluated based on factors such as integrity, track record, financial soundness, competence and capability, and potential conflict of interest with the CRC’s business. Importantly, compliance with these criteria is perpetual, and CRCs are obligated to ensure adherence at all times.
Furthermore, CRCs are required to monitor any changes in the status of their CEOs and directors. If any change results in non-compliance with the Fit and Proper Criteria, the CRC’s board is mandated to immediately cease the individual’s functions, inform the SECP, and initiate the process for replacing them with a suitable candidate.
This circular will streamline the licensing process for CRCs, fostering greater trust and reliability in the sector. Additionally, Annexures for Information to be provided by promoters, major shareholders (other than a body corporate), proposed directors, and proposed chief executive officer of the CRC have been annexed to the Circular for guidance.
Effective immediately, all CRCs are advised to comply with the provisions outlined in the Circular.
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