In a move that may eventually force influential people to disclose their offshore beneficial ownerships, a Senate panel on Wednesday proposed an amendment to the Companies Bill to make it binding on non-resident and dual-national Pakistanis to disclose their monetary interests abroad.
The Senate Standing Committee on Finance amended Clause 452 of the under discussion Companies Bill 2017 that deals with companies’ global register of beneficial ownerships. The Securities and Exchange Commission of Pakistan (SECP) also endorsed the committee’s proposal, which will ensure that the government backs the new amendment at the time of final voting in the National Assembly.
Though the National Assembly has already passed the bill, it will now again go back to the lower house of parliament for final voting due to changes proposed by the Senate panel.
“Every substantial shareholder or officer of a company incorporated under this act, who is citizen of Pakistan within the meaning of the Citizenship Act, 1951, having shareholding in a foreign company or body corporate shall report to the company his shareholding or any other interest as may be notified by the commission,” according to the new amendment. These people will have to disclose their interests on a specified form within 30 days of holding such position or interest.
Non-resident Pakistanis – those who live abroad for more than six months in a year, and dual nationals – will now fall under the definition of Pakistanis for the purpose of this clause, said SECP Chairman Zafar Hijazi after the meeting.
All Pakistanis should be covered under the new companies’ regime, as some in the past have managed to remain non-resident Pakistanis, said Standing Committee Chairman Senator Saleem Mandviwalla.
Premier Sharif’s sons Hussain and Hasan Nawaz, who are at the centre of Panamagate investigations, are non-resident Pakistanis. Under the new definition, they will also have to disclose their offshore interests in future. The natural beneficiary of London flats is one of the questions the Supreme Court has raised in its last month’s Panama verdict.
The new amendment is in line with the best international practices. The G20 Summit in Brisbane had adopted new high-level Principles on Beneficial Ownership and Transparency.
Beneficial ownership means ownership of securities beneficially owned, held or controlled by any officer or substantial shareholder directly or indirectly either by him or her, the wife or husband, the minor son or daughter, etc.
The SECP had proposed the global register concept after the Panama scandal surfaced last year that revealed more than 400 Pakistanis holding offshore companies.
Premier Sharif and his family members will now be quizzed by officials from civil and military institutions regarding their alleged offshore holdings. The premier has denied any wrongdoing since the scandal first surfaced in April 2016, when the International Consortium of Investigative Journalists reported on a huge cache of documents from a Panamanian legal firm that had been leaked to it.
The new amendment would undo some of the concessions that the government conceded during the passage of the Bill in the National Assembly Standing Committee on Finance and Revenue.
Initially, the government had proposed that the foreign companies working in Pakistan also be required to disclose their offshore interests. The National Assembly rejected this clause. Now, it will not be mandatory for foreign companies to provide information of beneficial ownership except in cases where the SECP seeks such information.
The world is fast embracing the principle of transparency and it is imperative that Pakistan also adopt them, SECP Chairman Zafar Hijazi said while endorsing the changes proposed by the standing committee in the clause 452.
The SECP said that throughout the world, the concept of beneficial ownership is under debate in view of policy recommendations of the Finance Action Task Force. Jersey is the first jurisdiction to adopt the concept of register of beneficial ownership. UK has also stared implementing this concept.
The SECP will share such information of beneficial ownership with the FBR and any other agency, including the courts.
The Overseas Investors Chambers of Commerce and Industry had proposed to exclude the non-resident Pakistanis from the ambit of law but both the SECP and the Senate panel did not agree. The OICCI also wanted exclusion of company officers from the requirement of reporting substantial ownerships, if they come to know about this during course of their work.
Courtesy: Express Tribune