ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued a detailed procedure for the liquidation of trusts by corporate restructuring companies.
According to the SECP’s new procedure issued on Saturday, the corporate restructuring company shall intimate to the Corporate Restructuring Board regarding the decision of liquidation of trust within seven working days of such decision, failing which the Commission may, upon intimation by the Board, initiate proceedings against the corporate restructuring company.
The trust may be liquidated by the occurrence of any of the following events subject to approval of three-fourth majority of beneficiaries of the trust, namely:
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(a) When the objective for establishment of trust including acquisition, disposal, resolution or settlement of non-performing assets has been achieved and net proceeds of such assets have to be disbursed as per the constitutive document of the trust and transfer and assignment agreement.
(b) Where the corporate restructuring company goes into liquidation, becomes bankrupt or has a liquidator appointed over its assets, or its licence has been cancelled or it does not hold a valid licence;
(c) If in the opinion of the corporate restructuring company, the trust is not commercially viable or the purpose of the trust cannot be accomplished.
(d) On occurrence of any event or circumstances which, in the opinion of the corporate restructuring company, requires the trust to be liquidated.
The SECP stated that where the trust is to be liquidated, the corporate restructuring company shall present to its board of directors, the relevant information with regard to the realization of proceeds of the trust property.
Where a trust is to be liquidated, a liquidator would be appointed, SECP maintained. On the completion of the liquidation process of the trust, the corporate restructuring company shall present to its board of directors a report on the liquidation process.
In process of liquidation of a trust, the corporate restructuring company or the liquidator, as the case may be, shall comply with the applicable provisions of the prevalent provincial trust laws.
Copyright Business Recorder, 2024