Contesting the Public Sector Classification Assigned by SECP in Security Papers
Security Papers Limited (SPL) is set to legally challenge the recent decision by the Securities & Exchange Commission of Pakistan (SECP), which categorized it as a Public Sector Company (PSC).
In a notice issued to the Pakistan Stock Exchange on Wednesday, SPL expressed its disagreement with the SECP’s ruling, dated January 26, 2024. The company plans to appeal this decision across all relevant legal platforms.
SPL argues that SECP’s decision overlooked its status as a Public Listed Company, a designation stemming from an international pact involving Pakistan, Iran, and Turkey.
According to the SECP’s January 26 order, SPL meets the criteria for a PSC as outlined in sub-section (54) of section 2 of the Act and the Rules, based on its shareholding structure. The SECP pointed out that the company is indirectly government-owned, as entities such as the State Bank of Pakistan (SBP), State Life Insurance Corporation (SLIC), Punjab Provincial Cooperative Bank Ltd (PPCBL), National Investment Trust (NIT), National Bank of Pakistan (NBP), and Pakistan Reinsurance Company Limited (PRCL) are considered ‘agencies of the Government or statutory bodies.’ These entities have the authority to elect, nominate, and appoint the majority of SPL’s directors.
The SECP’s determination also noted SPL’s failure to comply with certain provisions of the Act and the Rules, including the election of two independent directors who do not fulfill independence criteria and the omission of a statement in its annual report detailing compliance status with the Rules.
Furthermore, the SECP instructed SPL to rigorously adhere to the established framework for PSCs, as periodically updated by the Federal Government. This includes directives on governance, board composition, director elections, and the appointment of independent directors.