CISs risk management: AMC must have at least one investment committee: SECP

Every Asset Management Company (AMC) must have at least one investment committee which shall be responsible for selecting and developing appropriate investment and risk management strategies for the proper performance of the Collective Investment Schemes (CISs).

The Securities and Exchange Commission of Pakistan (SECP) has issued an

S.R.O.1233(I)/2019 here on Wednesday to amend Non-Banking Finance Companies and Notified Entities Regulations, 2008.

According to the SECP, an AMC shall have at least one investment committee which shall be responsible for selecting and developing appropriate investment and risk management strategies for the proper performance of the Collective Investment Schemes and developing internal investment restrictions limits and restriction for Collective Investment Schemes.

Any employee of Asset Management shall not hold office as employee in another Asset Management Company; hold any office including that of a director of another Asset Management Company and engage in brokerage services, SECP directed the AMCs.

An NBFC shall ensure compliance with the following requirements while appointing independent directors on its board: Firstly, independent directors shall be selected from the data bank notified by the Commission in accordance with section 166 of Companies Act, 2017; and secondly the independent directors shall be elected in the same manner as shareholder directors are elected in accordance with section 159 of the Companies Act, 2017.

Under the revised regulations, Listed Companies (Code of Corporate Governance) Regulations, 2019 shall be applicable on Asset Management Companies and Deposit taking NBFCs: Provided that the Commission may exempt any specific NBFC or class of NBFCs from applicability of this regulation.

The SECP said that for an NBFC engaged exclusively in the business of issuance of guarantees to enhance the quality of debt instruments issued to finance infrastructure projects in Pakistan, the total outstanding Exposure (fund based and non-fund based) by an NBFC to a person shall not at any time exceed forty per cent (40 percent) of the equity (as disclosed in the latest financial statements) and Qualified Capital and for this purpose the Commission may, through circular, specify qualified capital and its terms and conditions, the SECP added.