The Securities and Exchange Commission of Pakistan, the country’s financial regulator, has invited comment from market participants on new draft rules it has published that are intended to
The Securities and Exchange Commission of Pakistan, the country’s financial regulator, has invited comment from market participants on new draft rules it has published that are intended to provide for the first time a regulatory framework for the private equity and venture capital sector.
According to the commission, the introduction of private equity and venture capital funds will follow the launch of real estate investment trusts as part of its efforts to make available financial products tailored to the prevailing market conditions and the needs of various investor categories according to their risk appetite.
The latest amendments made to Part VIII-A of the Companies Ordinance, 1984, through the Finance Act, 2007, empower the commission to make regulations in relation to section 282 of the ordinance. Accordingly, in exercise of the powers conferred by section 282B (2) of the ordinance, the Private Equity and Venture Capital Regulations 2007 have been drafted and placed on the regulator’s website to elicit public comment.
According to the commission, private equity is a distinct asset class that can play a vital role in the transformation of the local economy by providing growth capital to the local corporate sector and promises to unlock the hidden value of private companies by providing capital and managerial skills for growth and expansion. It believes private equity can also assist in the turnaround of ‘sick and badly managed’ companies and help Pakistan attract foreign direct investment.
The private equity and venture capital fund will be an unlisted closed-end unit trust open only to high net worth individuals and institutions. Funds will provide equity for seed and start-up capital, expansion, buyout as well as turnaround investments, and although designed primarily for private companies, they can participate in privatisation deals as well.
The commission has invited comments and suggestions on the draft regulations to be sent to Ms. Sarwat Aftab, joint director, Non-Banking Finance Companies Department, Securities and Exchange Commission of Pakistan, 6th Floor, NIC Building, Blue-Area, Jinnah Avenue, Islamabad (Fax. +92 51 920 8648, E-mail: [email protected])
