A new corporate law would bar courts from entertaining applications for winding up of Non-Banking Finance Companies (NBFCs) unless such application is accompanied by a certificate in writing from the Securities and Exchange Commission of Pakistan (SECP) certifying that it has no objection to the making of such application.
According to the NBFCs and Collective Investment Vehicles Bill, 2020, no court shall entertain an application for winding up of an NBFC by the court unless such application is accompanied by a certificate in writing from the commission, certifying that it has no objection to the making of such application.
A NBFC shall not file a petition for its winding up, unless it satisfies the commission in the specified manner that it has satisfied all outstanding claims of depositors, creditors and other stakeholders or it is unable to pay in full all its debts to its depositors, creditors and other stakeholders as they accrue and has obtained prior approval of the commission, and the commission may, in the interest of the public, impose such conditions as it deems appropriate.
The court, while ordering the winding up of a lending the NBFC, if the circumstances permits and deemed fit, may direct the official liquidator to give preference in payment to certain class or classes of depositors having value not exceeding such amount, individually or collectively, as determined and deemed fit, it added.
In case of a voluntary winding up of a NBFC, the license of a NBFC shall be deemed to be cancelled on the date it obtains certificate from the commission.
Upon cancellation of all the licenses or registrations, the functions and carrying on the business of NBFC or the collective investment vehicle shall cease and notwithstanding anything contained in Section 301 or sub-clause (c) of the proviso to Section 304 of Companies Act, 2017, the Commission may move the court for winding up of the NBFC, Non-Banking Finance Companies and Collective Investment Vehicles Bill, 2020.
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