In order to meet new challenges, the Commission decided to constitute a Corporate Laws Review Commission ("CLRC") during the year 2005, headed by the former Chief Justice of Pakistan, Mr. Justice (R) Ajmal Mian and other renowned professionals including Mr. Hameed Chaudhri, Mr. Razzak Dawood, Ms. Musharaf Hai, Mr. Sohail Hasan, Dr Tariq Hassan, Mr. Tahsin iqbal Khan, Mr. Qazi Jamil, Mr. Razi-ur-Rahman Khan, Mr. Rashid I. Malik, Dr Khalid Ranjha and Mr. S. Salim Raza. Barrister Amber Darr, Executive Director (Law) at the SECP acted as Secretary to the CLRC.
A sub-committee was also formed under the Chairmanship of then Chairman SECP, Dr Tariq Hassan and other volunteer members of CLRC to identify issues which were required to be addressed. The CLRC also agreed to formulate a concept paper that aims to identify the future direction of CLRC, allowing for the progressive development of the corporate sector and enhancing corporate compliance. They further agreed to examine emerging norms in company law across various jurisdictions and to invite comments from stakeholders including representative bodies of lawyers and accountants, business community and from the public. They prepared a comparative statement of laws and issued letters to leading professional bodies, law firms, stock exchanges, chartered accountants, Bar Associations, Chamber of Commerce and Industry to seek their comments in this regard. The concept paper was presented to the Commission on 25.5.2006. In March, 2007 it was decided by the CLRC that new Company Bill will be drafted rather than merely suggesting changes in the existing Companies Ordinance, 1984. A sub-committee was also formed to assist Mr. Salman Raja who was tasked to draft the new Companies Bill. In the year 2011 first draft of the Bill was presented to the CLRC which was debated clause by clause.
In the year 2012, CLRC was again revamped and leading figures of different spheres of life where included in the team with the view to bring experience and knowledge in this historical endeavour. It was decided that the CLRC would work under the Chairmanship of Honourable Chief Justice of Pakistan (Retd.) Ajmal Mian. Apart from Chairman, CLRC consisted of dedicated and qualified members like Mr. S. Salim Raza, Mr. Abdul Razzak Dawood, Mr. Anwar Mansoor Khan, Mr. mOIN Fuda, Mr. Ebrahim Sidat, Mr. Asad Umar, Mr. Salman Akram Raja (Consultant). The SECP being the host body of this Commission also has its representation in terms of presence of then Chairman SECP and Commissioner Company's Law Department Mr. Tahir Mahmood and others. However, the work on the new Company Bill remained dormant due to host of reasons.
In the year 2015 the new Chairman SECP, Mr. Zafar ul Haq Hijazi after taking over reins of SECP resolved to overhaul the hackneyed legal framework of the corporate sector in Pakistan, which was a major stumbling block in the development of corporate sector in Pakistan. Among other important legislative reforms, the Chairman Mr. Zafar Hijazi made enactment of new Company law, which meets the modern day requirement of corporate sector in Pakistan imbibing established international best practices, his foremost mission. In order to accomplish the herculean task it was decided by the Commission in April, 2015 that the Company Bill will be reviewed and finalized with strict time line with the help of internal Committee of experts and input from relevant departments. Mr. Abdul Rehman Qureshi, the former Chairman and Advisor to the Commission and Mr. Muhammad Hayat Jasra, former Secretary to the Commission, also assisted the Commission in formulating the draft. The internal review of the draft Companies Bill was completed within record time of six months. It is pertinent to mention here that in finalizing the Bill, various related laws in the international jurisdictions were also thoroughly consulted.
The Commission while finalizing the Bill reviewed many international jurisdiction ie:
India
-- The Companies Act, 2013
-- The Company Secretaries Act, 1980
-- The Partnership Act, 1932
-- The Securities and Exchange Board of India Act, 1992
-- The Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014
-- The Renewed Scheme for Certified Filing Centers
-- The Company Secretaries Act, 1980
United Kingdom
-- The Companies Act, 2006
-- The Insolvency Act, 1986
-- The Company Directors Disqualification Act, 1986
Australia
-- Corporations Act, 2001
Singapore
-- Companies Act (Amended 2006)
Hong Kong
-- Companies Ordinance, 2013
-- Companies (Winding Up and Miscellaneous Provisions) Ordinance (Amended 28 of 2012)
New Zealand
-- Companies Act, 1993
Malaysia
-- Companies Act, 1965
The Commission initiated unprecedented consultation process in order to ensure all-inclusive Companies Bill having wide support of the corporate sector and professionals in the country. The draft Companies Bill was placed on the website of the Commission on 06.12.2015 for the first time for soliciting public opinion/feedback. Apart from this the Commission also held extensive consultative sessions with major stake holders.
Presentation to Institute Chartered Accountants of Pakistan (ICAP) through video conferencing was given on 04.01.2016. Furthermore consultative sessions with various chambers of commerce and industries were held throughout the country detailed as hereunder:
i 07-01-2016 Lahore Chamber
ii. 08-01-2016 Faisalabad Chamber
iii. 13-01-2016 Multan Chamber
iv. 18-01-2016 Karachi FPCCI
v. 25-01-2016 Islamabad SECP (Head Office)
vi. 08-02-2016 Peshawar ICAP - CPD
vii. 23-02-2016 Quetta Chamber
To sum-up the debate, a seminar with participation from all stakeholders was held at Islamabad on 26-03-2016 which was attended by galaxy of experts and representative bodies of financial sector. The seminar chaired by the Honourable Minister for Finance, Mr. Mohammad Ishaq Dar.
In view of consultative sessions and input provided by the experts in the aforementioned seminar, the draft Companies Bill was further amended and placed on the website of the Commission on 06.04.2016. On the advice of the Honorable Minister for Finance, the Commission undertook further consultations various international and national organizations and eminent professionals to improve the draft Bill and include new concepts. Details of consultative sessions is as under:
-- Consultative Sessions at Lahore jointly organized by IFC, World Bank - CIPE (07-04-2016)
-- Meeting with ICAP Team (13-04-2016)
-- Seminar at ICAP Lahore (06-05-2016)
-- Meeting with ICMAP Focus Group (12-05-2016)
-- Two days Session with ICMAP Team (16-17 May 2016)
-- Seminar at ICAP Islamabad (30-05-2016)
-- Seminar at Islamabad jointly organized by IFC, World Bank- CIPE (02-06-2016)
-- Seminar at Karachi chaired by the Honorable Minister for Finance (05- 09-2016)
-- Meeting with Association of Builders and Developers of Pakistan (24- 10-2016)
The Commission also received various comments and suggestions from stakeholder and practitioners during the entire process through emails and letters which were considered and, wherever possible, necessary amendments were incorporated. Advertisements in press were also given for soliciting comments. Eminent experts including Dr Pervez Hassan, Mr. Masood Naqvi, Mr. Qamar uI Islam, Mr. Hamid Chaudhri, Mr. Rashid Anwar, Mr. Khalid Majeed and Malik Muhammad Rafique Rajwana also gave their input on the Companies Bill. Mr. Masood Naqvi took special interest in the finalization of the company law and extensively contributed through his time and expertise.
After thorough public consultation and legal vetting by Ministry of Law and Justice the draft Companies Bill 2017 was introduced in the National Assembly on 18.11.2016 and on the same day referred to Standing Committee on Finance, Revenue, Economic Affairs, Statistics and Privatization.
In its first meeting the Standing Committee on Finance, Revenue, Economic Affairs, Statistics and Privatization on 20-12-2016 constituted a sub-committee under the Convenorship of Mr. Daniyal Aziz, MNA consisting of Mr. Asad Umar, MNA, Mian Abdul Mannan, MNA, and Syed Naveed Qamar, MNA. The sub-committee conducted extensive sessions 5th, 10th, 11th, 17th and 18th January 2017 respectively and suggested fifty three changes to the draft Bill. Finally, the Committee presented its report to the National Assembly. However, to assuage the certain reservations of the opposition, the Bill was again discussed and further amendments in twenty clauses were made and the National Assembly passed the Bill with consensus on 6.02.2017.
Subsequently, the Companies Bill as passed in the National Assembly was introduced in the Senate on 17.2.2017 and referred to the Standing Committee on Finance, Revenue, Economic Affairs, Statistics and Privatization for deliberation on the same day. The Standing committee conducted extensive sessions on 3td, 7th 12th, 13th, 18th, 19th, 27th, 28th April and 3rd & 4th May, 2017. The Committee also held its first ever public hearing on 3td April, 2017 in the Auditorium of Karachi Chamber of Commerce and Industry (KCCI) Karachi in which representatives from various Chambers of Commerce, Trade and Business Associations and general public participated and shared their views/suggestions on the Bill. The Committee after extensive reading of each clause of the Bill proposed 43 amendments in the Bill. The Senate approved the Bill along with amendments on 15.5.2017.
In terms of Article 70(2) of the Constitution of Pakistan, the Bill was again sent to the National Assembly for its passage. The National Assembly on 24.5.2017 after a debate passed the Bill without any further amendments. The Companies Bill, 2017 is the longest and exhaustive piece of legislation ever in the parliamentary history of Pakistan comprising of five hundred and fifteen sections and eight schedules, and took almost 12 years in making.
The Bill will ensure maximum participation of members in decision making process of the company through use of modern electronic means of communication and aims to address the issues relating to protection of interest of minority shareholders and creditors. It will facilitate the growth of economy in general and the corporate sector in particular by providing simplified procedure for ease of starting and doing business, greater protection of investors and augment corporatization in the country.
The Bill provides adequate measures against fraud, money laundering and terrorist financing and necessary provisions have been proposed regarding powers of the Commission to investigate including joint investigation and provisions requiring officers of a company to take adequate measures to curb such violations.
In order to give immediate impetus to the economy and to stimulate economic growth there was an emergent need to make law and provide relief and incentives to corporate sector especially small and medium size companies. The market experts and business community were in unison during various stakeholders consultations on the company law that it should be enacted at the earliest as it will elevate Pakistan's economy and address long standing demands of the business community. Unless emergent legislative steps are taken, Pakistan's corporate sector will not be able to compete with the international market players without reduction in cost of incorporating and doing business. The encouragement of use of modern communication technology coupled with simplified regulatory procedure as envisaged in the Bill will provide much needed relief to the corporate sector. Moreover, Pakistan has recently been upgraded to emerging market status and there is a huge international interest to invest in Pakistan due to various policy initiatives of the government. The expeditious merger and acquisition mechanism are also necessary to address corporate solvency and growth in Pakistan. Surely, it is a momentous achievement for the all stakeholders concerned including business community, chambers, ICAP, various experts who remained involved in the process, the Ministry of Finance, the Commission as a regulator of corporate sector and specially the legislatures, who took unprecedented interest in the improvement of Bill through their constructive suggestions and debate. There is no gainsaying the fact, that the new Companies Bill, 2017 is fruit of Parliamentary democracy in Pakistan and a gift to a nation in general, and to the corporate sector in particular. Pakistan's future is intrinsically linked to a strong and vibrant corporate sector and the Companies Bill, 2017 will prove to be a milestone in shaping the destiny of a Pakistan.