Listed firms: SECP issues new disclosure requirements of financial statements

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued new disclosure requirements of financial statements by listed companies and their subsidiaries, which are not engaged in Shariah non-permissible business activities including tobacco business.

The SECP has issued SRO 1278(I)/2024 to amend the Fourth Schedule to the Companies Act, 2017.

The SECP clarified that Shariah non-permissible business activities shall include but not be limited to business of conventional financial institutions, including conventional banks, insurance, interest-based lending, gambling and betting, liquor and liquor-related activities, pork and pork-related activities, non-halal food and beverages, Shariah non-compliant entertainment, tobacco and tobacco-related activities and other activities that are deemed Shariah non-permissible.

According to the new amendments, every listed company and its subsidiary, which is not engaged in Shariah non-permissible business activities as their core business activities, shall disclose the following in their standalone and consolidated financial statements as per Section 228 of the Securities Act, as separate disclosures by way of a note that is cross-referenced with relevant notes.

Disclosures required in relations to the Statement of Financial Position—Liability Side:

(i) Financing (long-term, short-term, or lease financing) obtained as per Islamic mode.

(ii) Interest or mark-up accrued on any conventional loan or advance.

Disclosures Required in the Statement of Financial Position – Asset Side:

(iii) Long-term and short-term Shariah compliant Investments.

(iv) Shariah-compliant bank deposits, bank balances, and TDRs.

Disclosures required in relation to the Statement of Comprehensive Income:

(v) Revenue earned from a Shariah-compliant business segment.

(vi) Break-up of late payments or liquidated damages.

(vii) Gain or loss or dividend earned on Shariah compliant investments or share of profit from Shariah-compliant associates.

(viii) Profit earned from Shariah-compliant bank deposits, bank balances, or TDRs.

(ix) Exchange gain earned from actual currency.

(x) Exchange gains earned using conventional derivative financial instruments.

(xi) Profit paid on Islamic mode of financing.

(xii) Total Interest earned on any conventional loan or advance.

(xiii) Source and detailed breakup of other income, including breakup of other or miscellaneous portions of other income into Shariah-compliant and non-compliant income.

Other Disclosure requirements are:

(xii) Relationship with Shariah-compliant financial institutions, including banks, takaful operators and their windows, etc.

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