The Senate Standing Committee on Finance has directed Securities and Exchange Commission of Pakistan (SECP) to immediately issue instructions to Pakistan Stock Exchange Limited (PSX) to stop asking personal details of minor children (having no CDC accounts) of directors of listed companies. The issue was taken up by Senator Ayesha Raza Farooq during the committee meeting here at the Parliament House on Wednesday.
The issue was related to the clarification from the PSX and SECP on the issue of recent PSX regulations requiring a director of a listed company to disclose personal details of minor children including birth ID, documents even if the children themselves hold no share.
Senator Ayesha said that multiple notices are being served on the directors of the listed companies to share details of minor children having no accounts in the Central Depository Company (CDC). The SECP should issue instructions to the PSX stipulating compliance of requirements for listed companies.
The SECP officials assured the committee that the commission would issue instructions to the PSX to further clarify the issue of seeking information from listed companies.
When the chairman of the committee Farooq H Naek asked whether it would be violation of the SECP rules and regulations to issue such instructions to the PSX, the SECP officials said that it would not be a violation of laws.
Naek directed the SECP that once the clarification is being issued, the copy of the same should be sent to the Senate committee as well.
Giving briefing on the issue, the SECP officials informed the committee that the PSX obtains information of directors, CEO, substantial shareholders, executives, and their spouses as well as minors from listed companies and issuers. It may be noted that minor information is required only if they have CDC accounts.
The said information is obtained to monitor trading in "closed period" or otherwise by directors, substantial shareholders and their associates either directly or indirectly and to have disclosure for general public, and to take regulatory action if directors, CEO, substantial shareholders, executives and their spouses trade directly or indirectly and do not disclose their transactions as per clause 5.6.1.(d) of PSX Regulations, the official said.
The SECP official said that the SECP had also advised the PSX to devise a mechanism to monitor compliance of abovementioned clause in terms of timing, adequacy and accuracy of such disclosures. All disclosures required to be made by listed companies to PSX and general public are made through the Pakistan Unified Corporate Action Reporting System (PUCARS).
The PUCARS is the dissemination portal and correspondence requirement in the context is prescribed in PSX Rule Book and PSX Correspondence Manual.
With regard to disclosure of shareholding details of minor children, the same are prescribed under Reporting and Disclosure (of shareholding by Directors, Executive Officers and Substantial Shareholders in Listed Companies) Regulations, 2015 as required under Section 101, 102, 103, 104 and 107 of Securities Act, 2015 pertaining to details of beneficial owners, the SECP officials highlighted.
The Section 101 of the Securities Act, 2015 (the Act) requires every director, executive officer or substantial shareholder of a listed company to disclose details of their shareholding to the listed company. The section 101(5) stipulates that shares held by minor children shall also be included in the holding of such person. The objective is to ensure that directors, substantial shareholders and executives of a listed company do not evade the disclosure requirement by holding shares in the name of their minor children who are dependent on such persons, the SECP officials added.