Karachi: In pursuance of its mandate to encourage and promote investment, the Securities and Exchange Commission of Pakistan (SECP) has been working on an initiative to provide a one-window operation to foreign entities for obtaining security clearance certificate for incorporation in Pakistan.
In this regard, the SECP organized an important meeting here Monday with the Interior Ministry, corporate sector and the legal farternity. Federal Interior Minister, Mr Rehman Malik, chaired the meeting. Mr Muhammad Ali, the SECP Chairman, Mr Tahir Mahmood, Commissioner, Company Law Division, senior Interior Ministry officers, representatives of law enforcement agencies and many business associations attended the meeting.
The participants compared notes on devising a mechanism for expeditious security clearance for foreign-funded businesses. They also discussed the resolution of cases pending for processing of security clearance of foreign investors at the earliest. Prominent business leaders who attended the meeting expressed their concerns to the minister regarding the lengthy procedure for obtaining security clearance.
Currently, all foreign companies setting up businesses in Pakistan and foreign nationals interested in investing in local companies are required to obtain a security clearance (NoC) from the security agencies, which is a prerequisite before registration and acceptance of statutory returns.
Under the 1973 Rules of Business, the ministry of interior is primarily responsible for regulating entry and exit of foreigners; therefore the SECP as matter of policy forwards the cases to ministry of interior for security clearance. Besides, it is also incumbent on foreign companies to obtain a prior NOC from the Board of Investment before starting their business activities.
The SECP in coordination with the Interior Ministry has been striving to streamline the process of obtaining security clearance and to remove unnecessary barriers in the way of foreign investment. The delay in security clearance is also exposed to public litigation and many complaints from the general public and chartered accountant firms have also been received.
The SECP believes that due to relatively lower domestic investment and resources, the foreign direct investment (FDI) is critical to spurring Pakistan’s productivity and growth. The encouragement of foreign investment in the country and development of corporate sector and capital market in Pakistan is possible only through coordinated efforts of all stakeholders.
In order to facilitate investors, the SECP Chairman requested the Interior Ministry that the SECP may be allowed to proceed with incorporation of companies/registration of statutory returns having foreign investment/directors and appointment of foreign directors by making it mandatory to file all relevant documents necessary for security clearance along with an undertaking that in case of refusal of security clearance by the interior ministry, the relevant returns shall be de-registered forthwith and directorship cancelled.
This will be seen as instrumental in restoring Pakistan’s investment reputation. It will also improve Pakistan’s ranking as an investor-friendly destination, he had argued.
As part of its business-friendly strategy, the SECP has introduced eServices, an online company registration system, and charges only a nominal fee of Rs25,000 for registration of a company with a minimum paid-up capital of Rs100,000. Furthermore, the SECP does not charge any fee for security clearance.
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