Chapter # 02

Securities and Exchange Commission Of Pakistan

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Establishment of SECP
The securities and exchange commission of Pakistan (SECP) was established on January 01, 1999 to replace the corporate law authority (CLA).
The SECP was established under section 3 of the Securities and Exchange Commission of Pakistan Act, 1997 for supervision and regulation of the corporate entities, stock markets and self-regulatory organizations. It has been provided in the SECP act that the commission shall have a financial administrative and operational autonomy.
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Appointement and Head Office

The federal government is the appointing authority of the commission. It may appoint as many members of the commission, (called the commissioners), as it deems fit and necessary for the smooth function of the commission. The SECP shall be a body corporate with perpetual succession and common seal. It may sue and sued in its own name and may enter into contracts and acquire assets and incur liabilities The head office of the commission shall be situated in Islamabad. The commission is empowered to open as many offices in other cities of the country as are needed. Free Powerpoint Templates

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Objectives of the Commission

The Securities and Exchange Commission of Pakistan act, 1997 (SECP Act) has specified the following objects of the securities and exchange commission of Pakistan (SECP): 1) Beneficial regulation of capital markets,

2) Superintendence and control of corporate

entities , and 3) Regulation of the matters connected with or incidental to the corporate entities
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Commissionner appointement
The members of the commission are called commissioners. The federal government may appoint as many commissioners as are deemed necessary. However the minimum number of commissioners shall not be less than five and not more than seven. Other provisions are: 1) The majority of the commissioners shall be always be of private sector person Private sector person means a person means who is not in the service of Pakistan or anybody owned or controlled by the federal government or a provincial government excluding a university or an educational institution. Free Powerpoint Templates

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Commissionner appointement
2) In discharge of its functions and exercise of its powers, the SECP shall conduct its proceedings in this accordance with the regulations made by it.
3) The remuneration and allowances of the chairman and the commissioners shall determined by SECP with the approval of the policy board.

4) Any vacancy in or defect in the constitution of the SECP shall not invalidate any act or proceeding of the SECP.
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Qualification of Commissionner
A person to be appointed as commissioner should be a person known for his; 1) 2) 3) 4) Integrity Expertise Experience and Eminence in any relevant field including the following fields. Securities market; Law; Accountancy; Economics; Finance Insurance and Industry Free Powerpoint Templates

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Disqualification of Commissionner
The following persons cannot be appointed or remain as commissioners or members of the policy board.

1) A person who has been convicted of an offence involving moral turpitude; 2) A person who has been or is adjudged insolvent; 3) A person who is incapable of the discharging his duties 4) A person who being a member remains absent from three consecutive meetings of the policy board 5) If a person is ex-officio member and fails to appoint another person to board as member during his absence 6) A person who fails to disclose any conflict of interest at or within the time provided 7) A person who contravenes any of the provisions of the Free Powerpoint Templates SECP act Page 11

Chairman Commission & Functions

A chairman appointed by the Federal Government heads the commission. The chairman shall be the chief executive of the commission. A person shall not be appointed as chairman of the commission for more than two consecutive terms.

Functions of the Chairman 1) Day to day administration of the affairs of the commission. 2) Supervision of the smooth functioning of the commission according to the provisions of the SECP act and regulations made by the commission 3) Furnish information and reports as and when required by the federal Government and the Free Powerpoint Templates securities and exchange policy board (policy board) Page 12

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Terms of Office Commissionner

For the purpose of term office the commissioners

are categorized as:

1) Term A commissioners 2) Term B commissioners and 3) Commissioners The provisions relating to the term of office of each of the above categories are summarized in the

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Terms of Office Commissionner

Term A commissioners
These are the commissioners who are selected at random ballot out of the commissioners (excluding

the chairman of the commission) appointed under

the securities and exchange commission of Pakistan act,1997 for the first time. The minimum number of

such commissioners shall be three.

The term of such commissioners shall be two years. Term A commissioners may be reappointed for a further period of three years.
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Terms of Office Commissionner

Term B commissioners
These are the commissioner who is not selected as term A commissioners. The term of such commissioners shall be three years. Term B commissioners may be reappointed for a further period of three.
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Terms of Office Commissionner

Commissioners
Any commissioners appointed after the expiry of the

term of Term A or Term B commissioners or upon the

occurrence of any vacancy shall hold the office for a period of three years.

Term B commissioners, such commissioner if eligible

may be re-appointed. Note: The categories of term A or term B commissioners do not exist since the year 2002. Now only commissioners
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Vacation of Office & Removal

Vacation of Office by Members or Commissioners

The office of any commissioner of the commissioner the member of the policy board vacated upon the: Removal by the federal government; Resignation; or Death of the member or commissioner.

Removal by Federal Government

The federal govt. may remove any of the members of the policy board if such person becomes disqualified under any provision of the SECP act and only if the disqualification arises from the judgment or order of: A court; A tribunal of competent jurisdiction; or An impartial person or body of person constituted Free Powerpoint Templates Page 18 according to the rules, after due enquiry.

Power and Functions of SECP

The companies ordinance 1984 The Securities and Exchange Commission of Pakistan act, 1997 specify in detail, The Functions and Powers of the SECP. Functions and powers of the commissioner under the both statuses

are discussed hereunder:

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Power and Functions of SECP

1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11)

Functions and powers under the Companies Ordinance

12)
13) 14)

15) 16)

Confirm alteration in memorandum Impose terms and conditions while confirming alteration in memorandum Extend the period of its order confirming the alteration with the registrar. Hear the appeal against refusal of registrar to register the memorandum and articles of a company. Approve adoption of certain names by a company. Hear appeal against decision of the registrar about the proposed name of a company. Grant a license for establishment of an association not for profit. Cancel the license issued under section 42. If the company violates any of the conditions imposed at the time of granting license Allow conversion of a public company into private company. Grant relief from consequences of default in complying with conditions constituting a company a private company Approve prospectus and allow issuance of prospectus more than thirty days before the subscription list is due to open Approve the issue of offer to public for shares or debenture by a person holding more than ten percent (10%) of the shares of debentures of the company. Grant approved for issue for issue of securities outside Pakistan. Approve a financial institution to be appointed of transfer agent on behalf of the company Free Powerpoint Templates Hear appeal against refusal of directors to register the transfer of shares. Page 20 Allow a company to issue shares at a discount.

Power and Functions of SECP

17) Permit a company to issue shares to employees under employees stock option scheme 18) Permit a company to purchase its own shares under buy-back of shares rules 19) Allow reflection in the register of mortgages and charges. 20) Extend the period for holding annual general meeting at a place other than in town of its registered office. 21) Allow a listed company to hold an annual general meeting at a place other than in the town of its registered office. 22) Call for a general meeting, if default is made by company in holding its any general meeting. 23) Order for fresh election of directors on request of substantial acquirer of shares in a listed company 24) Prescribe the amount default in whose payment may render a person ineligible for the office of director. 25) Approve a loan to director by a company 26) Prescribe the limit exceeding which the acquisition or disposal of an asset by company should be made by passing aboard resolution 27) Prescribe the qualification of company secretary. 28) Prescribe the qualification and functions of independent share registrar of a listed company. 29) Grant approval for appointment of sale purchase sale or distribution agent. 30) Specify the class of companies or undertakings to which provisions regarding Free Powerpoint Templates investment in associated companies shall not apply. Page 21

Power and Functions of SECP

31) Empower any person to inspect the register of members and directors shareholdings on its behalf. 32) Many require submission of statements of beneficial owners of listed securities. 33) Recover benefits from unauthorized trading of listed securities by directors officers, etc 34) May prescribe that certain particulars be included in the book of account of specified companies 35) Authorize some officer to inspect books of accounts kept by a company. 36) Order conducting of special audit 37) Exempt a company from disclosure of certain information in directors report. 38) Require submission of additional statements of accounts and reports. 39) Permit a company to withhold or defer the payment of dividend one declared by the company 40) Appoint auditors of a company in a case where auditors are removed 41) Appoint a qualified person as auditor of a company where company has appointed any unqualified or disqualified person as the auditor. 42) Prescribe the additional matter to be included in auditors report. 43) Appoint a person to investigate the affairs of a company. 44) Initiate action against management of a company under certain cases 45) Impose restrictions on transfer of shares of debentures 46) Issue license to a non-banking finance company 47) Make rules for functioning of NBFCS. Free Powerpoint Templates

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Power and Functions of SECP

48) File a petition for winding up of a company 49) Make order for payment of unclaimed dividend

50) Prescribe fees payable under the companies ordinance

51) Enforce compliance with the provisions of the companies ordinance 52) Furnish annual report to the federal government 53) Delegate its powers to registrar or any other officer. 54) Power to make regulations necessary to carry out the purposes of the companies ordinance. 55) Power to issue directives circulars guidelines, etc
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Power and Functions of SECP

Powers and Functions under the SECP Act;
1) Identify and recommend the matters requiring the policy discussion by board 2) Regulate the issue of securities 3) Regulate the business in stock exchange commodity exchange and any other securities market; 4) Supervise and monitor the activities of any central depository and stock exchange clearing house. 5) Register and regulate the working of the 1) Stock brokers 2) Sub-brokers 3) Share transfer agents 4) Bankers to an issue 5) Trustees of trust deeds 6) Registrars to an issue 7) Underwriters 8) Portfolio managers 9) Investment advisors and Free Powerpoint Templates 10)Any other intermediaries Page 24

Power and Functions of SECP

6) Propose regulations for the registration and regulating the working of collective investment schemes, including unit trust schemes 7) Promote and regulate self-regulatory organizations 8) Prohibit fraudulent and unfair trade practices relating to securities markets 9) Promote investors education and training of intermediaries of securities markets 10)Hear and decide investor complaints against persons involved in brokerage business for any violation of rules etc 11)Conduct investigations in respect of matters related to the SECP act or the companies ordinance 1984 12)Regulate substantial acquisition of shares and the merger and take-over of companies 13)Regulate professionals who provide services within the financial services markets 14)Maintain and issue panel of auditors for different companies 15)Call information from the stock exchanges and undertake Powerpoint inspections conduct Free inquiries andTemplates audits thereof; Page 25

Power and Functions of SECP

16)Consider and suggest reforms of the law relating to companies bodies corporate or securities markets 17)Encourage the organized development of the capital market and the corporate sector in Pakistan; 18)Conduct research relating to the capital market and the corporate sector; 19)Perform the functions and exercise the powers of the corporate law authority under the companies ordinance 1984, the securities and exchange ordinance 1969 the modaraba companies and modaraba (floating and control) ordinance 180 and any other law ot the time being in force. However the power of the corporate law authority to make rules or regulations cannot be exercised by the commission 20)Perform the functions and exercise the powers of the federal government under the federal government to make rules or regulations cannot be exercised by the commission 21)Propose regulations in respect of all or any of the aforesaid matters for the consideration and Templates approval of the board Free Powerpoint
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Power and Functions of SECP

22)Exercise powers discharge duties and perform functions assigned to it under the law of insurance 23)Ensure and monitor the compliance of law by the insurers , insurance surveyors and insurance intermediaries 24)Regulate the organized connected with insurance business; 25)Encourage the organized development of the insurance market

in Pakistan
26)Promote and regulate development of private pension scheme and fund ;and

27)Promote and regulate any scheme fund arrangement or

undertaking established by companies or corporations for entitlement of post-employment benefits of their employees
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Security and Exchange Policy Board

Securities and Exchange Policy Board
The policy board is the highest authority within the jurisdiction of the SECP act. It supervises the functions of the commission and determines the policy matters concerning the smooth functioning of the commission, the corporate entities and the selfregulatory organizations. The federal government shall appoint the chairman of the policy board out of the members of the board

Powers and functions of policy board

The policy board has the following powers and has to Free Powerpoint Templates perform the following functions under the SECP act: Page 28

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Security and Exchange Policy Board

1) If required advise the federal government after consultation with the commission on the matters relating to the Securities industry and insurance industry; Regulation of companies and corporate sector; Protection of the interests of the investors 2) Consider and approve any regulations with respect to implementation of policy decisions, proposed by the commission. 3) Consider and approve the budget of the commission for each financial year. 4) Express its opinion on any policy matters referred by the federal government on the commission 5) Oversee the performance of the commission under the SECP act, 1997 6) Exercise all such powers and perform all such functions as are conferred or assigned to it under the SECP act 1997 Powerpoint Templates 7) Specify fees penalties Free and other charges payable under the SECP act Page 30 1997.

Security and Exchange Policy Board

Members of the Board
The total number of the members of the policy board is fixed as nine (9). Five (5) of the members of the board shall be appointed out of the government employees and the remaining four (4) from the private sector.
The following officers of the government shall be the members of the board: 1) Secretary to the government of Pakistan, finance division; 2) Secretary to the government of Pakistan, law division; 3) Secretary to the government commerce division; 4) The chairman of the SECP; and 5) A deputy governor of the state bank of Pakistan nominated by the governor of the state bank of Free Powerpoint Templates Page 31 Pakistan.

Security and Exchange Policy Board

Term of Office of the Members An ex-officio member of the board shall hold office till such time as her holds the office by virtue of which he is a member. He will cease to be a member upon transfer, retirement resignation or termination or in any other way ceasing to hold the concerned office.
The private sector member shall hold office for a term of four (4) years. Such members, if eligible may be reappointed for a further period of four years. After the expiry of their second term of four (4) years. After the expiry of their second term such members cannot be re-appointed. Further upon attaining the age of sixty-five (65) years a member shall cease to Free Powerpoint Templates Page 32 hold the office.

Security and Exchange Policy Board

The Meeting of the Board
The policy board shall have at least four (4) meetings curing a calendar year. The quorum for these meetings shall be four (4) With the approval of the board an ex-officio member may authorize an officer of his division shall not be below the rank of additional secretary. The rule of majority shall prevail in all decisions of the board. In the event of a tie, the chairman of the board shall have a casting vote. The board is empowered to invite any person who is not a member to attend any of its meetings. The person so attending the meetings cannot participate in any decision or Free Powerpoint Templates vote at the meeting. Page 33

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Thank you
for
being with Me
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