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ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has allowed Special Purpose Vehicles (SPVs) to offer debt securities, including redeemable capital, debentures and Sukuk under the securitisation process.

The SECP has issued Asset-Backed Securitization Regulations, 2022 through a notification issued on Saturday to increase the number of registered companies as SPV with the commission.

According to the notification, the new regulations shall apply to the offer of debt securities, including redeemable capital, debentures and Sukuk by special purpose vehicles under the securitization process. Special purpose vehicles owned or controlled by the Federal Government or Provincial Government may also adopt these regulations to the extent in accordance with applicable law.

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A company proposing to commence business as a Special Purpose Vehicle (the “SPV”) shall submit an application for registration along with documents as per Schedule-I. The company must have a paid-up capital of not less than Rs one million. The company ensures that its promoters or sponsors, directors, chief executive, officer or employee fulfills the fit and proper criteria and provide affidavits/undertakings duly attested by Oath Commissioner as specified.

Before making any public offer of debt securities, Special purpose Vehicle shall seek prior approval of the Commission under section 87 and 88 of the Act and for private placement of debt securities, it shall fulfil the requirements of private placement of Securities Rules, 2017, the SECP stated.

The new regulations further revealed that the special purpose vehicle shall be obliged to manage its assets in the interest of the investors in good faith and to the best of its ability and without gaining any undue advantage for itself or any of its related parties, associates or its officers.

Moreover, the special purpose vehicle shall be responsible for the acts and omissions of all persons to whom it may delegate any of its functions as manager as if they were its own acts and omissions and keep at its registered office, proper books of accounts and records, including register of investors to enable a complete and accurate view to be formed of its assets, liabilities, income and expenditure, as per the requirements of the Companies Act, 2017.

No Special Purpose Vehicle shall merge with, acquire or take over any other company or business, unless it has obtained prior approval of the Commission in writing to the scheme of such merger, acquisition or take-over, SECP regulations added.

The term “Securitization” means a process whereby a SPV raises funds through the issuance of debt securities including Sukuk and uses such funds by making payment to the originator and through such process acquires the title, property or right in specified assets of the originator.

Copyright Business Recorder, 2022

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