The Securities and Exchange Commission of Pakistan (SECP) and the Board of Investment (BoI) have proposed major amendments to the Companies Act, 2017 to reduce the regulatory burden on companies and improve the ease of doing business in Pakistan by streamlining regulatory compliance processes.
The amendments related to decriminalisation would shift from penal sanctions to regulatory remedies and pecuniary penalties, promote business confidence and compliance, and align Pakistan’s corporate framework with global best practices, the SECP stated.
In response to evolving business dynamics, the SECP and the BoI constituted a committee to review and recommend amendments to the Act. The committee adopted a holistic approach, taking into account international best practices, stakeholder feedback, operational challenges, and alignment with SECP’s digitalisation initiative, Leading Efficiency through Automation Prowess (LEAP).
The proposed amendments, inter alia, aim to achieve several key objectives, including reducing the regulatory burden on businesses, enhancing ease of doing business through improved efficiency, increasing digitalisation, promoting corporatisation, and eliminating ambiguities and redundancies in existing legislation.
The reforms also emphasise increased transparency in internal company processes and dealings with the SECP, clearer responsibilities and heightened accountability for key company officials, and swifter enforcement mechanisms.
Collectively, these measures are designed to ensure that the Companies Act, 2017 serves as a catalyst for business growth by reducing unnecessary regulatory hurdles, streamlining processes, and fostering an environment conducive to entrepreneurship and innovation. At the same time, the reforms seek to instil a culture of compliance, governance, and transparency that strengthens trust and confidence within the corporate ecosystem. By prioritising business facilitation while maintaining robust oversight, the proposed changes aim to enable companies to thrive in a competitive and rapidly evolving economic landscape.
The proposed amendments represent a forward-looking initiative to ensure that Pakistan’s corporate regulatory framework remains relevant, robust, and growth-oriented. By addressing emerging challenges and incorporating global best practices, the reforms aim to position Pakistan as a competitive, transparent, and business-friendly destination for corporate activity, the SECP added.
The SECP highlighted that the scope of the proposed amendments is comprehensive, covering various aspects of corporate functioning and addressing practical difficulties faced by companies. The amendments would focus on improving ease of doing business, streamlining regulatory compliance processes to support corporate sector development, reducing administrative burdens to facilitate corporatisation, and simplifying compliance requirements by reducing reporting obligations.
The amendments would also address corporate governance principles, including the adoption of globally recognised governance standards and the introduction of proportionality in the applicability of financial audits and the filing of financial statements based on the size of companies.
In addition, the proposed changes promote digitalisation and the use of technology by encouraging electronic filing and record-keeping, facilitating remote participation in corporate meetings, and strengthening digital systems for accounting, data maintenance, and data protection.
