SECP issues governance regulations draft

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ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Tuesday issued a draft of licensing and corporate governance regulations for nonprofit associations and sought publicís feedback on it before its finalisation. The proposed regulations shall apply only to companies licensed under Section 42, hence companies licensed under the Trade Organization Ordinance are outside the scope of the regulations, a news statement said.

The proposed regulations are expected to bring in more transparency in utilisation of donations and funds by the associations, causing increased confidence of national and international donors. The regulations require licensed NGOs to appoint chief financial officer, company secretary and chief internal auditor, and define their respective roles. The regulations also require NGOs to implement proper corporate financial reporting framework and certify about secretarial compliance of all the requirements of the 1984 Companies Ordinance and the regulations.

The SECP has the mandate to register and licence nonprofit associations as limited liability companies. With the issuance of draft regulations, an effort has been made to consolidate the licensing policy as pronounced through various circulars issued from time to time.

Another objective behind the issuance of the draft regulations is to bring in improvements in requirements and procedures, related to the licensing of nonprofit associations so as to ensure more logical checks in identifying genuine applicants for formation of corporate NGOs.

The regulations specify prescribed form and documents for making application for seeking license under Section 42 whereas promoters/directors are required to have sufficient skills, knowledge and experience and majority of whom shall have independent background.

Various conditions have been proposed for ensuring objectivity and transparent functioning of NGOs after the grant of license.

The regulations also propose provisions for better corporate governance of the licensed NGOs. As per the regulations, the board shall have a balance of executive and non-executive directors, including independent directors and those representing donors with the requisite skills, competence and knowledge. The executive directors and those representing donors shall not be more than one-third of the elected directors, including the chief executive.

Courtesy: The News

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