Ban on companies recommended: Senate body against political funding

The Senate Standing Committee on Finance has strongly recommended a strict ban on companies for making any kind of political funding or taking participation in political activities under the draft Companies Bill 2017. This was recommended by Chairman Standing Committee on Finance Senator Saleem Mandviwalla during the briefing of Securities and Exchange Commission of Pakistan (SECP) officials at the meeting of the committee here at Parliament House on Tuesday.
The SECP officials said that under section 184 (prohibition regarding making of political contributions) of the draft bill, a company shall not contribute any amount or allow utilisation of its assets to any political party; or for any political purpose to any individual or body. If a company contravenes the provisions, the company shall be liable to a penalty of level 2 on the standard scale and every director and officer of the company who is in default shall be punishable with imprisonment of either description for a term which may extend to two years and shall also be liable to a fine of one million rupees.
The SECP officials said that any company shall not, directly or indirectly, participate in any political campaign for elective public office or other political activities akin to those of a political party or contribute any funds or resources to any political party or any individual or body for any political purpose. The SECP officials also said that under section 185 (prohibition regarding distribution of gifts) of the draft bill, a company shall not distribute gifts in any form to its members in its meeting. Any contravention or default in complying with requirement of this section shall be an offence liable to a penalty of level 1 on the standard scale.
The SECP officials further told the committee members that under the proposed law, a defaulter would not be eligible to become director of the company, adding the proceedings will be carried out through court. Board meetings of the companies would become possible. It has also been proposed that the minutes of company board meetings would be dispatched to the members within seven days. The SECP officials further informed the committee that under the draft law, no company would be permitted to participate in political activities.
Under draft of the Companies Ordinance, no action will be taken against the independent directors. The powers of directors have been devolved to the board. Under to new law, no company would be allowed to take part in political activities. The companies would not give funds to political parties. There would be a restriction on companies on giving away gifts to the shareholders and if someone was found involved in this practice, he/she would be fined Rs 25,000. In case, someone does not pay the fine, one will have to pay the fine on a daily basis. Senator Muhsin Aziz stated that there is a need to define the term gift. Senator Saud Majeed was of the view that exchange of gifts promotes love and there should be no restriction on this practice, adding there is a restriction on bribe but not on exchange of gifts. Senator Mandviwalla stated that shareholders ask for gifts. Chairman SECP Zafar Hijazi was of the view that the shareholders should not give gift even of Re 1. The committee members recommended a reduction in the penalties and punishments under the companies' ordinance.