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Government incorporates SECP proposals in Finance Bill

ISLAMABAD (June 14 2003) : The government has incorporated a number of Securities and Exchange Commission of Pakistan's (SECP) proposals in the Finance bill 2003-04.

These included capital gains from investment in listed securities for which period of exemption has been extended to 2005; profit accruing on non-performing loans and advances was permissible as a deduction from income in case of banking companies, which facility has now been extended to NBFCs.

NIT and ICP were exempted from withholding tax deduction on dividends, profit on debt and brokerage or commission under sections 150,151 and 233 of the Income Tax Ordinance, 1979.

This facility has been extended to Modarabas' and NBFC's approved collective investment schemes.

In computing income of a person chargeable to tax under “income from property,” deduction was allowed on account of share in rent paid to HBFC.

To facilitate private sector housing companies, this concession has been extended to such companies.

The government has also appreciated many other proposals for amendments in the Securities and Exchange Law, which have been incorporated in the laws.

Some of these amendments were in the Securities and Exchange Ordinance, 1969.

Although Commodity Exchange had been established at Karachi about a year ago but it could not be operationalized due to absence of any regulatory framework.

This was a major deadlock in promoting and regulating an important organisation.

The difficulty has been removed through appropriate amendments in the Securities and Exchange Ordinance.

A new section 32D has been inserted exclusively for the regulation of the business of “Commodity Exchange”.

The forward and future contracts, being a prominent feature of the trade in Commodity Exchange, have been recognised as security, which would now be traded in the market like other securities ie shares, debentures and TFCs.

Another important amendment has been inserted in sub-section (2) of section 8 of the Ordinance, which protect small investors from colossal loss caused due to de-listing of securities.

Under the new amendment, a de-listed security could be traded for a specified period to provide opportunity to the investors for dis-investment of their shareholdings.

The SECP has been established under the SECP Act, 1997 and its responsibilities and sphere of work has been enshrined therein.

The amendments made in the said Act include;

Under Section 5 of the SECP Act, the SECP may have not less than five and no more than seven Commissioners.

Due to the resignation, removal and other unforeseen reasons, the minimum number of Commissioners of SECP may fall below the minimum.

Such a situation could render the activities and proceedings of the Commission challengeable.

With a view to ensure smooth working of SECP, new sub-section (5) has been inserted in section 5, providing that the proceedings of the Commission would be valid if due to some reasons, its number of Commissioners at a certain point of time falls below the minimum.

The regulation of the Commodity Exchange has been brought within the jurisdiction of the SECP through an amendment in sub-section (4) of section 20 of the Act.

The regulation of Private Pension Schemes were already assigned to SECP through a Government administrative order, it would now become possible for regulating such Schemes and Funds, in pursuance of the new amendment in sub-section (4) of section 20.

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