ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has the authority to specify any capital adequacy requirements in addition to the minimum equity requirements for the Non Banking Finance Companies (Establishment and Regulation). According to the S.R.O.701(I)/2020 issued by the SECP, the commission has amended Non Banking Finance Companies (Establishment and Regulation) Rules, 2003.

Under the revised regulations, the commission may specify any other capital adequacy requirements in addition to the minimum equity requirements for forms of business in general or for a form of business in particular. The Commission may specify any other requirements in lieu of minimum equity requirements for any particular form of business.

No NBFC shall commence business unless it has such minimum equity as may be prescribed by the Commission in the official Gazette; and (b) continue business unless it has such minimum equity as may be specified by the Commission for all NBFCs in general and for an NBFC in particular, SECP said.

The SECP has also issued new requirements for majority shareholder of NBFC.

No person can hold or become beneficial owner of ten percent or more shares of an NBFC without prior approval of the Commission. If the Commission has determined that a person is holding or is a beneficial owner of ten percent or more shares of an NBFC without prior approval of the Commission or a person that acquired shareholding with prior approval of the Commission subsequently fails to meet the fit and proper test as the Commission may, by an order in writing stating reasons, require such person to reduce, divest or transfer to a fit and proper person, his shareholding in the NBFC within such reasonable period and in such manner as may be specified in the order: Provided that the Commission may, in the interest of the investors/shareholders of NBFC or general public, by an order in writing stating reasons, require a person holding less than ten percent shares of an NBFC to reduce, divest or transfer to a fit and proper person, his shareholding in the NBFC within such reasonable period and in such manner as may be specified in the order, the SECP added.

Copyright Business Recorder, 2020