Security Papers to Contest Public Sector Label Given by SECP

Security Papers Limited (SPL) has decided to challenge the Securities & Exchange Commission of Pakistan (SECP) order that has determined it as a Public Sector Company. “SECP vide its order dated January 26, 2024 has determined SPL as a Public Sector Company. The Company contests the adjudication and would be challenging the determination at all the appropriate legal forums,” the company said in a notice to Pakistan Stock Exchange on Wednesday. The company maintains that the decision was taken disregarding the corporate structure of SPL as a Public Listed Company, which is based upon an international agreement between Pakistan, Iran and Turkey, it added. In its order dated January 26, SECP said that in view of the facts, it is evident that as per shareholding of the company, it falls under the definition of PSC as defined under sub-section (54) of section 2 of the Act and the Rules. The shareholding structure of the Company confirms that the Company is indirectly owned by the Government. As SBP, SLIC, PPCBL, NIT, NBP and PRCL fall within the term ‘agency of the Government or statutory body’ they have the power to elect, nominate and appoint a majority of directors of the Company. Hence it is established that the Company is a PSC and by: (i) electing two independent directors who do not meet the independence criteria; and (ii) failing to publish and circulate a statement along with its annual report to set out the status of its compliance with the Rules and filing the same to the Commission, the Respondents are in contravention of proviso to sub-section (2) of section 166 of the Act and rule 3 & 24 of the Rules, respectively. Moreover, SECP directed the company to ensure meticulous compliance with the applicable framework for PSCs as notified by the Federal Government from time to time including the governance framework for PSCs, the composition of board of directors, election of directors and appointment of independent directors.