The Securities and Exchange Commission of Pakistan (SECP) has shared a draft Venture Capital (VC) Bill with the Board of Investment (BOI) for public consultation.
The move comes as the government seeks to expand access to risk capital and attract more investment into startups and high-growth businesses.
What does Pakistan's new Venture Capital Bill propose?
The proposed legislation aims to encourage domestic and foreign investment, support entrepreneurship and job creation, and strengthen Pakistan's technology and innovation ecosystem. It introduces simplified rules for venture capital funds and fund managers, alongside streamlined licensing and registration requirements.
The Bill was drafted in response to a federal government directive to establish a dedicated regulatory framework for venture capital and improve funding opportunities for emerging businesses. It envisages flexible operating structures and defined governance and reporting standards for fund managers.
Why does Pakistan need a formal venture capital framework?
Despite significant growth potential, Pakistan's startup and technology sectors have limited access to formal venture capital. A substantial portion of investment activity currently takes place offshore or outside the country's existing regulatory framework.
The proposed law seeks to bring such activity into a clearer domestic framework. By formalising rules for venture capital funds, the SECP aims to close this gap and channel more capital directly into local startups.
What has the SECP said about the proposed bill?
SECP Chairman Dr Kabir Ahmed Sidhu said the legislation would help channel private capital towards emerging businesses while recognising the higher risks associated with venture capital investments.
The framework, he said, aims to reduce regulatory barriers while maintaining appropriate governance and investor protections.
What happens next in the consultation process?
SECP and BOI will now consult startups, fund managers, legal and financial experts, the State Bank of Pakistan, Pakistan Stock Exchange and relevant industry bodies before the draft moves forward in the legislative process.
Feedback gathered during this stage is expected to shape the bill's final form before it is sent for formal government legislation.
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