KARACHI, Feb 25: In order to facilitate investors, the Chairman Securities and Commission of Pakistan (SECP) requested the Interior Ministry to allow SECP to proceed with incorporation of companies/registration of statutory returns having foreign investment/directors and appointment of foreign directors.

The SECP chairman, Muhammad Ali, was speaking at a meeting here on Monday.

Federal Interior Minister Rehman Malik, representatives of the company Law Division, interior ministry officials and members of business associations participated in the meeting.

The SECP chief observed that the above could be done 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 would be de-registered forthwith and directorship cancelled.

“This will be seen as instrumental in restoring Pakistan’s investment reputation" the SECP chairman affirmed and added that it would also improve Pakistan’s ranking as an investor-friendly destination.

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.

Muhammad Ali stated that the SECP has been working to provide a one-window operation to foreign investors for obtaining Security Clearance Certificate (SCC) for incorporation in Pakistan.

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.

The business leaders who attended the meeting expressed their concerns over the lengthy procedure for obtaining security clearance. Under the 1973 Rules of Business, the ministry of interior is primarily responsible for regulating entry and exit of foreigners.

The SECP, therefore, in order to comply with the 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 litigation and public and some of the chartered accountant firms have also expressed grievance.

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.