Pakistan introduces new ‘full disclosure’ offshore companies law
Pakistan has introduced legal powers to obtain complete information of foreign and offshore companies operating in the country.
The new Companies Law 2016, which replaces Pakistan’s Companies Ordinance 1984 ruling, was promulgated late Friday evening by Pakistan president Mamnoon Hussain.
According to an article published in Pakistan legal news website Dawn, the new law was introduced by the government to fulfil international obligations for the country to upgrade its corporate laws and meet global beneficial ownership commitments.
New SECP powers
As a result of the change the Securities and Exchange Commission of Pakistan (SECP) will now have the power to obtain complete information on the directors, officers and beneficial owners of foreign and offshore companies operating in Pakistan.
Previously rules granted sovereignty to foreign companies not to disclose the details of their directors and beneficial owners and their other investments, either inside Pakistan or abroad.
“If a Pakistani established an offshore company and registered that company in Pakistan through a ‘principal’ who could be a local or a foreigner, the SECP could not ask them for details of all investors in that company,” Tahir Mahmood, Commissioner of the SECP’s Companies Law Division, told Dawn.
Under the new law, SECP will maintain a ‘Global Register of Beneficial Ownership’ for companies, which will have to commit to full disclosure and share complete records of the beneficial ownership of all substantial shareholders and officers in local and foreign companies doing business in Pakistan.
Pakistan finance minister Ishaq Dar said in a statement that measures in the new law would help curb corruption, address challenges related to offshore investments and ensure transparency in governance.
Dar also said the new law would also reduce the cost of incorporating and doing business, which would enable Pakistan’s corporate sector to be become competitive on the international market.
Similarly, the Companies Law 2016 sets stringent disclosure rules, even for non-listed local companies, and makes it mandatory for them to provide details of all investors having more than 10pc shares in the company, to the SECP.
“An investor with at least 10pc investment in any Pakistani company will have to inform us about all their investments, both in Pakistan and abroad,” the SECP commissioner said.
The law also empowers the SECP to investigate and conduct joint investigation over provisions related to measures against fraud, money laundering and terrorist financing.