SECP issues notices to 28,761 companies over beneficial ownership disclosures

Pakistan's Securities and Exchange Commission has issued show-cause notices to 28,761 companies for failing to submit mandatory information on their ultimate beneficial owners. The move steps up enforcement of corporate ownership disclosure requirements.

Why did SECP issue notices to thousands of companies?

SECP said the companies had failed to submit Form 19, which is required under the Companies Act, 2017, to declare compliance with ultimate beneficial ownership requirements. The regulator has given companies 30 days to submit the required information, warning that noncompliance within this period could lead to legal action.

Who qualifies as an ultimate beneficial owner under Pakistani law?

An individual holding 25% or more of a company's shares or voting rights may qualify as an ultimate beneficial owner. A person who directly or indirectly exercises effective control over a company may also fall within this definition. SECP said the disclosure requirement aims to improve transparency around corporate ownership structures.

What penalties do companies face for noncompliance?

Section 123A of the Companies Act requires companies to maintain a register of ultimate beneficial owners, keep the information accurate and updated, and provide the required declaration to the registrar. Regulation 48 of the Companies Regulations, 2024, requires companies maintaining such registers to submit a declaration of compliance alongside their annual return through Form 19.

Under Section 123A(3), a director, officer or other responsible person can face a penalty of up to PKR 1 million, while the company itself may be penalized up to PKR 10 million. In one show-cause notice, SECP said its examination of records at the Company Registration Office in Lahore showed a company had, prima facie, failed to file Form 19 declarations for financial years 2024 and 2025.

What happens next for companies that received notices?

SECP directed the company in question to submit outstanding declarations within 30 days and explain why a penalty should not be imposed. After filing the forms, the company must also submit certified copies to SECP as evidence of compliance, along with any explanation or supporting documents. The company may request a personal hearing or appear through an authorized representative within the prescribed period.

SECP said that if a company fails to comply or does not provide sufficient cause, the commission may decide the matter based on available records and issue an order under Section 123A. The regulator also warned that concealment of evidence or misstatements made in response to a show-cause notice could attract further liability under the law.