SECP eases licensing for foreign firms; drops prior security clearance

The Securities and Exchange Commission of Pakistan (SECP) has eased licensing for companies with foreign sponsors and directors, the regulator said in a statement on Monday.

SECP will now accept self-declaration undertakings in place of prior security clearance of foreign directors at the application stage. The change aims to cut procedural delays and improve Pakistan's investment climate.

The appointment of foreign directors remains subject to final clearance by the relevant authorities. Any director denied clearance must be replaced under the revised framework.

The change is expected to support foreign investment in Pakistan's regulated financial services. It will benefit companies in capital markets, non-banking finance, insurance, and other regulated sectors.

Why did SECP ease licensing for foreign-sponsored firms?

Companies with foreign directors previously had to obtain security clearance before submitting their licensing applications to SECP. The process often took considerable time.

Investors viewed the requirement as a barrier to establishing regulated financial businesses in Pakistan. The delays affected sectors central to attracting foreign capital.

The revised framework aims to reduce procedural delays and improve regulatory certainty. It is part of broader efforts to facilitate foreign investment in Pakistan.

What conditions still apply to foreign directors?

The appointment of foreign directors will still be subject to clearance by the relevant authorities. The licensing application can proceed before that clearance comes through.

Applicants must provide an undertaking that any proposed director denied clearance will be replaced. The replacement requirement preserves regulatory oversight under the new system.

SECP Chairman Dr. Kabir Ahmed Sidhu said the revised framework strikes a balance between facilitating investment and maintaining regulatory oversight.

Sidhu said the measure would enable genuine investors to enter Pakistan's regulated financial sector more efficiently. Compliance with applicable laws and security requirements remains intact.