SECP directive to insurance companies regarding minimum paidup capital

LAHORE (March 11 2004): The Chairman of Securities and Exchange Commission of Pakistan (SECP), Dr Tariq Hassan, has advised insurance companies with paid up capital less than Rs 80 million to step up their efforts to meet the threshold by December 31, 2004.

He said this during meeting with representatives of private sector general insurance companies to discuss the issues being faced by the industry.

The meeting, which was held in Lahore, was in continuation of his earlier meetings with leading insurance companies held on December 12, 2003 and January 16, 2004, at Karachi.

The participants of the meeting included CEOs and representatives of non-life insurance companies, including Asia, Business & Industrial, Capital, Credit, Co-operative Insurance Society of Pakistan, National General, North Star, Pakistan General, Pak Equity, Pakistan Mutual, Silver Star and United.

Dr Hassan encouraged the companies to submit their action plans, including proposals for mergers, wherever possible, as to how these companies were planning to raise their capital base to the required minimum level.

At the same time, he reminded/reiterated that no relaxation would be given in this regard since there was no such provision under the insurance law.

An important issue discussed during the meeting was banks' limit allocated, particularly to small and medium size insurance companies.

The SECP Chairman assured them that he would look into the issue and take it up with the State Bank and commercial banks if there was merit in this case.

The meeting also discussed wide ranging issues, inter alia taxation of the income of the insurance companies, including capital gain tax.

The participants were told that these issues had already received attention of the SECP and the proposals formulated in consultation with the industry had been sent to the Central Board of Revenue which were being considered by the tax authorities.

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