Securities and Exchange Commission of Pakistan determined to protect interests of modaraba certificate-holders
Islamabad, November 14, 2016 (PPI-OT):In its resolve to protect the interests of the modaraba certificate-holders, the SECP closely monitors the financial performance and affairs of modarabas. In this respect, necessary enforcement actions are taken to enhance the level of regulatory compliance by modarabas. Recently the SECP took enforcement actions against two non-compliant modarabas. It is expected that these measures would help in better corporate governance and strengthening of the risk management by the modaraba management companies.
An enquiry into the affairs of a modaraba was conducted, revealing that the modaraba’s management had violated the provisions of the law. The major violations, inter alia, included non-disclosure of related party transactions in the financial statements, non-transfer of investment in the name of modaraba, charging of expenses from the modaraba fund etc. The modaraba company was directed to reimburse the amount of expenses erroneously charged to the modaraba fund and strengthen the systems and controls in the modaraba to avoid such lapses in future. In another instance, the SECP observed that the management of a modaraba was non-compliant with the mandatory requirements of submission of periodic accounts to the stakeholders and online returns to the SECP.
The management also failed to get renewal of the registration of the Modaraba Company and authorization of the modaraba. On the said two accounts, the SECP imposed monetary penalties on the management companies. The managements of these modarabas have also been directed to ensure full compliance with the law in future. The SECP has vowed that no omission, lapse, irregularity or infraction of law will be tolerated in relation to managing public funds by modaraba companies, reaffirming that regulatory actions shall be taken against the defaulter management companies to protect investors’ interests, especially the certificate holders.
For more information, contact:
Head, Internal and External Communication
Securities and Exchange Commission of Pakistan (SECP)
NIC Building, 63 Jinnah Avenue, Islamabad
Tel: +92-51-9214005 or +92-51-9214009 (Ext. 378)