By Shakeel Ahmed
ISLAMABAD: The Senate Standing Committee on Finance and Revenue has approved the FATA related two bills the Limited Liability Partnership (Amendment) Bill, 2020, and the Companies (Amendment) Bill, 2020, with three alterations. The Committee met at parliament on Tuesday under the chair of Senator Farooq H. Naik.
It was agreed that committee members, Senator Musadiq Malik, Senator Imam-ud-Din and Senator Shery Rehman will present their proposed amendments in Senate on Wednesday (today) when the Bill will be tabled in the upper house.
The proposed amendments will be related to information of Ultimate Beneficial Ownership. The Committee Chairman Farooq Naik said that the FATF related amendments are need of the hour and in favor of country but the government should maintain the standards of justice in the proposed laws.
Earlier, DG Financial Monitoring Unit Khawaja Adnan Zaheer and Chairman SECP Aamir Khan briefed the subcommittee of Senate Committee on Finance and Revenue on the same amendments, which were later discussed in the Senate Committee. The SECP has proposed amendments in the Companies Act, 2017 and Limited Liability Partnership Act, 2017 to address gaps identified by Asia Pacific Group on money laundering against FATF recommendation No 24, relating to transparency of legal persons. The proposed amendments in both Acts have been vetted by the Ministry of Law and Justice and proposed changes have been incorporated.
The new proposed provision will be called 60 A- prohibition on the issuance of bearer shares or bearer share warrants etc. (1)The provisions relating to the prohibition on the issuance of bearer shares, bearer share warrants and similar equity or debt securities of bearer nature, as well as the manner of registration and cancellation in case any such bearer securities have been issued, are being introduced in order to prevent the misuse of companies from money laundering or terrorist financing abuses in line with the recommendations issued by the Financial Action Task Force.
It is further proposed to insert that (2) All existing bearer sales or bearer share warrants, if any, shall be registered or cancelled, in such manner and period, as may be specified.
(3) No civil proceedings shall be instituted or maintainable in any court in respect of bearer share, share warrant or any other equity or debt security or a bearer nature, by whatever name called, allotted, issued, sold, transferred, assigned or disposed of any by a company.
(4) In case of any violation of the provisions of this section, the company and every director and officer of the company shall be liable to a fine which may extend to one million rupees,
The SECP Chairman told the committee that these amendments are being introduced in order to prevent the misuse of companies from money laundering or terrorist financing abuses in line with the recommendations issued by the Financial Action Task Force (FATF).
Recommendation 24 of FATF related to (transparency and beneficial ownership of legal persons) is the relevant standard for the purpose. The proposed section 60 A is meant to comply with this recommendation.
Pakistan’s Mutual Evaluation report issued in October 2019 by the Asia Pacific Group on Money Laundering also highlighted certain deficiencies in the regulatory framework relating to the misuse of bearer shares and bearer share warrants etc.
Further, in the Companies Act, after section 123, the following section 123A shall be inserted, namely:- 123A. Information and Maintenance of Record of Ultimate Beneficial Owner:-
(1) A company shall maintain information of its ultimate beneficial owners in such form and manner, within such period, and obtain such declaration from its members as may be specified.
Any person who fails to comply with any provision of this section shall be liable to a fine that may extend to Rs 1 million and the company shall also withhold payment of dividend till complete information of documents as specified are provided to the company.
