ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has established a secretariat dedicated to upgrade the existing ‘corporate law’ to suit the new requirements.

The new law will offer tailored solutions to specific needs of the corporate sector and cater to aspirations of entrepreneurs and investors.

“At the heart of any economy lies a solid, flexible and enabling company law and we want to maintain a framework that is modern, competitive and forward-looking to facilitate enterprise and ensures transparency,” SECP Chairman Muhammad Ali said.

Though a Corporate Law Review Commission (CLRC) was established in 2005 under retired Justice Ajmal Mian to review the existing corporate law, but the draft of new law is still awaited.

The secretariat of the CLRC has been established at the SECP head-office for better coordination and its speedy and timely delivery.

Chairman SECP said that the existing law needs to be upgraded.

“First we need to establish mechanism to facilitate smaller companies,” Mr Ali said adding: “Current laws treat all small, medium and large companies equally”.

He said that among other things it does not offer guidelines for social companies.

“The current law assumes all companies to be driven by profit motive but now there are businesses promoting causes,” he added.The CLRC has been engaged in researching various international corporate law models such as the US State of Delaware, home to more than 60 per cent of Fortune 500 companies.

An official of the SECP said that commission is set to review the recent Companies Act 2006 of the United Kingdom, the new Indian Draft Bill and the corporate law regimes in most major trading hubs in the Asia-Pacific region including Australia, New Zealand, Hong Kong, Malaysia and Singapore.

“Based on the feedback from the previous public consultation, the new secretariat has been tasked to slew of material produced by the commission,” the SECP official said, adding that the secretariat will coordinate with CLRC to gather feedback from stakeholders so that the draft of new corporate law may be finalised.

The CLRC will make amendments to facilitate new entrants in the field of business.

SECP official said, “But this should not sacrifice the flexibility and sophistication demanded by larger corporations.”

The SECP is also considering the option of Islamic business model.

The new corporate law is likely to have defined mechanism for shareholder participation so that small investors can have a pro-active role in management.

Besides there will be a more rationalised financial and audit requirements for smaller and family owned businesses besides enforcing an international standard of reporting for larger corporations.