September 17 2007
The Corporate Law Review Commission - a body established by the Securities and Exchange Commission of Pakistan (SECP) on November 6 2005 to carry out a thorough review of the Companies Ordinance 1984 - has commenced redrafting the ordinance.
The redrafting is being carried out in accordance with the objectives set out in the concept paper submitted by the commission to the SECP. The paper emphasizes the need for a holistic review of the ordinance. The aim is to (i) reassess the objectives and provisions contained in the ordinance in light of the economic environment, and (ii) facilitate the creation and maintenance of a liberal, deregulated and efficient corporate sector.
Although the redrafting process has already started, it is unclear whether the provisions of the ordinance are to be amended or whether a new law altogether will replace the ordinance.
The main recommendations proposed by the commission in the concept paper are as follows:
If and when incorporated, the commission's recommendations will bring about
significant changes to the system. However, the impact of these changes remains
unclear at this stage. It is hoped that when drafting the law, the commission
will consider the need to provide greater freedom to companies with regard to
capital structure and management, with minimum interference from regulators.
This will encourage local and foreign investment; it will also allow investors
to incorporate companies and provide for management and operation in a manner
which, according to sponsors and other members (eg, primary stakeholders), is
best suited for achieving the business objectives of the company.
The commission's final proposals are yet to be seen. It is expected that all stakeholders will have the opportunity to comment on such changes before the new legislation is presented to Parliament.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.