Draft Whistleblowing Regulations, 2017

Government of Pakistan
Securities and Exchange Commission of Pakistan -.- Islamabad, 15th May, 2017

NOTIFICATION

S. R. O. 349(I)/2017 - The following draft of regulations, proposed to be made by the Securities and Exchange Commission of Pakistan, in exercise of powers conferred under clause (ii) of sub-section (1) of section 40, read with clause (fc) of sub-section (4) of section 20 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997) are hereby published, as a requirement of sub-section (2) of section 40 of the said Act, for the information of all persons likely to be effected thereby and notice is hereby given that the objections and suggestions thereon, if any, received within 30 days from the date of publication shall be taken into consideration by the Securities and Exchange Commission of Pakistan, namely:-

CHAPTER I
PRELIMINARY

1. Short title and commencement.- (1) These Regulations shall be called the Whistleblowing Regulations, 2017.

(2) They shall come into force at once.

(3) These regulations shall apply to the person or persons who alone or jointly, provides the Commission with information regarding a contravention or intended contravention of the laws administered by the Commissioin.

2. Definitions.- (1) In these Regulations, unless there is anything repugnant in the subject or context,-
   (a) "Act" means Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997); (b) "administered legislation" shall have the same meaning as assigned to it in clause (aa) of sub-section (1) of section 2 of the Act; (c) "audit committee" means the Audit Committee of the Board of Directors of a listed Company, as defined in Code of Corporate Governance 2012, or of a public sector company, as defined in Public Sector Companies (Corporate Governance) Rules, 2013; (d) "board" means board of directors of a company as referred in Companies Ordinance, 1984 (XLVII of 1984); (e) "employee" means a person who has entered into a contract of service or contract for services or an apprenticeship contract, as the case may be, with any listed company, its subsidiary, associated undertaking, public sector company, regulated persons or connected thereto;

(f) "former employee" means a person who no longer meets the definition of an employee but continues to have benefits payable under an employment plan; (g) "original information" means information is derived from own independent knowledge or analysis and is not already known to the Commission from any other source or is not exclusively derived from an allegation made in a judicial or administrative hearing, or investigation or from the news media, unless the whistleblower is a source of the information; (h) "regulations" means the Whistleblowing Regulations, 2017; (i) "voluntary disclosure" means that the disclosure is made on its own motion or on request, inquiry, or demand by the Commission:
Provided that the disclosure shall not be considered voluntary if the whistleblower is required to report the original information to the Commission as a result of a pre-existing legal duty, a contractual duty to the Commission or any other authorities or a duty that arises out of a judicial or administrative order; (j) "Protected disclosure or whistleblowing" means the original, voluntary disclosure in public interest by whistleblower, on an ongoing, suspected, or anticipated malpractice resulting in contravention of administered legislation by a company or a regulated person; (k) "Public Sector Company" means the public sector company as defined in Public Sector Companies (Corporate Governance) Rules, 2013 and; (l) "Whistleblower" includes any natural person who provides protected or voluntary disclosure.

(2) All words and expressions used but not defined in these Regulations shall, have the same meanings as assigned to them in the respective administered legislation or the rules and regulations prescribed thereunder.

3. Conduct of Whistleblower.--(1) Whistleblower shall:

(a) act in good faith; explanation: protected disclosure shall not be 'in good faith' if the whistleblower has any other secret or unrelated reason for making the disclosure; (b) have reasonable grounds to suspect that the proctected disclosure indicates that the company or regulated person has contravened or intends to contravene any administered legislation; (c) refrain from making false accusations; (d) take reasonable care to protect sensitive information and restrict disclosure to the relevant persons/authority only; (e) shall only disclose the details which are related with the violations; (f) ensure that the protected disclosure is accurate and complete to the best of his knowledge; (g) provide original information; (h) provide information voluntarily;

(i) provide complete evidence at his/her disposal to aid investigation of the issues reported; and (j) provide information keeping in view the limitation as per Regulation 11.

(2) The abusive use of the whistleblowing mechanism or submission of false, fraudulent or meritless information may render whistleblower liable to disciplinary action by the company in case of an employee of the company and/ or penal action by the Commission in case of a company or regulated person for misstatement under the Ordinance.

(3) Where a complaint is made in good faith and reasonably believed to be true by the complainant, no action will be taken against him/her if the allegation is found to be inaccurate or untrue upon enquiry:
Provided that the Commission shall be the final authority to decide whether a complaint is made in good faith and without any fraudulent or malicious motives.

4. Conduct of Company or regulated person with regard to Whistleblowing.- (1) The Board of a listed company, public sector company or regulated persons shall -

(a) formulate a whistleblowing policy;
(b) communicate the whistleblowing policy to all employees and place the same on the website of the company; (c) ensure that all protected disclosure shall be evaluated objectively; (d) ensure that the whitsleblowers are protected from retaliation or discrimination subsequent to a protected disclosure.

(2) No Company or regulated person shall take action to impede an individual from communicating directly with the Commission about a possible violation, including enforcing or threatening to enforce, under a confidentiality agreement.

(3) The Audit Committee shall report to the Commission, on June 30th and December 31st each year:

a) the list of protected disclosures reported (as per Form "C" annexed); b) outcome of the probe or enquiry conducted therein; and c) comments on the protection of the whistleblower.

5. Internal Whistleblowing. - (1) A whistleblower may make a protected disclosure before the Audit Committee or Board of Director of a listed Company or regulated person:

Provided that if the protected disclosure is in respect of a member of the Audit Committee, such disclosure shall be made directly to the Chairman of the Board of Directors or his assigned representative.

(2) In public sector companies, the scope of disclosure includes, but is not limited to, any action constituting a misconduct:

(a) as defined under Rule 5 of Public Sector Companies (Corporate Governance) Rules 2013; (b) failure to observe the principles of probity and propriety, objectivity, integrity and honesty, and relationship with the stakeholders; (c) any action leading to a conflict of interests' situation; and (d) failure to conform to fitness and propriety of directors and members of senior management.

6. Procedure for Internal whistleblowing. - (1) The Board of a listed company, public sector company or regulated persons shall include the minimum, following procedure in the whistle blower policy -

(a) whistleblower to report, in writing, openly or confidentially any protected disclosure; (b) to review the protected information; (c) to conduct enquiry into the allegations made and review the findings of the enquiry; (d) to determine the penalty or consequences for the employee or official who has been found involved in violation of applicable laws and rules made thereunder; (e) to report the findings of the enquiry to the Chairman of the Board of Directors of the company; (f) to protect whistleblower from retaliation as provided in Regulation 7; (g) for keeping the identity of the whistleblower confidential, if it is so desired; and (h) to report to the Commission in terms of Regulation 4.

7. Protection from Retaliation. - (1) The company, its board of directors, Audit Committee or management shall ensure that no whistleblower, if he/she is an employee/former employee, is subject to any adverse action, including but not limited to-

(a) any disciplinary action;
(b) dismissal, suspension, harassment or intimidation; (c) transfer against his or her will; (d) refusal of transfer or promotion; (e) demotion; (f) withholding or suspension of his salary and/or benefit payments; (g) subjecting to a term or condition of employment or retirement which is altered or kept altered to his or her disadvantage; (h) refusal of a reference or providing with an adverse reference, from his or her employer; (i) denial of appointment to any employment, profession or office; (j) threatening, either directly or indirectly, with any of the actions referred above, or be otherwise adversely affecting in respect of his or her employment, profession or office, including employment opportunities and work security.

(2) If any whistle blower is being victimized or is likely to be victimized on the grounds that he has lawfully provided information or made a disclosure to the Commission in accordance with the Regulations or assisted in any action taken by the Commission based on or related to such information, he may file an application in Form "B" before the Commission seeking remedy in the matter and the Commission may by an order in writing-

(a) direct the company regarding-
(i) reinstatement with the same seniority status that the individual would have had; and / or (ii) compensation to be paid to the whistleblower including previous pay, if not paid, and other benefits otherwise owed to the individual, with cost; (b) take any other action as it deems fit.

8. Direct reporting to the Commission: - (1) The whistleblower may contact the Commission directly to reveal information on the violations through following, but without necessarily disclosing his / her name, if the whistleblower is hesitant to reveal his/her identity:

(a) through online submission of Form-A on Commission's website or email; (b) postal address; or (c) fax line.

(2) The Commission shall communicate directly with the whistleblower regarding the protected disclosure, without seeking the consent of the company. All protected disclosures made to the Commission will remain confidential if the whistleblowers desires so.

9. Calling of Information by the Commission.- (1) Without prejudice to the powers conferred upon the Commission under any other law for the time being in force, the Commission may require, the company or regulated person or thier employees to furnish information or produce documents relevant to the protected disclosure without disclosing the identity of the whistleblower.

(2) If, the Commission is of the opinion that the company or its employees, has failed to furnish any document, paper or information which was required by the Commission, may after affording an opportunity of being heard, make any of the following orders:

(a) impose penalty as provided under section 40A of the Act; and / or (b) Issue directions and interim orders as may be deemed appropriate by the Commission.

10. Limitation. -- (1) Any information of alleged violations shall not come under the scope of these Regulations which is -

(a) more than 6 years old starting from the date on which the alleged violation occurred; or (b) more than 3 years old starting from the date when the facts material to the right of action are known or reasonably should have been known to the whistleblower regarding alleged violation,

11. Proceeding against whistle blower.- The Regulations do not provide amnesty/protection to whistleblowers nor preclude the Commission from bringing an action against such whistleblower for his conduct in connection with violations of the applicable laws, if any.

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Form "A"

Annual report on Whistleblowing as on December 31, ________

We, (full name of the company) hereby submit report of whistleblower disclosure reported, under the Whistleblowing Regulations, 2017 (the "Regulations"), as per following;

Name of Whistleblower	Nature of violations	Against (Name of the Entity)	Total Amount (Rs.) involved in violations	Comments on whistleblower protection

I declare that the information given in this form is true to the best of my knowledge and belief. I also declare that if any change occurs in the information given in this application and the accompanying documents, I shall report the same to the Commission on the same day on which the change occurs.

Signature of Chief Executive
Chairman Audit Committee of the Board

Form "B"

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN

Information Form

Under regulation 7 of Whistleblower Regulations, 2017

A. Details of Whistleblower
1. Last Name	First	M.I.
2. House Number		Street No:
City	Province	ZIP/ Postal Code
3. Telephone	Mobile	E-mail Address
4. Occupation		Preferred method of communication

B. Details about the Company / Entity you have a complaint against?
Company:
1.
2. Registered Address
City	Province	ZIP/ Postal Code
3. Phone	Fax Number	Email

C. About the Complaint

1. Occurrence Date (mm/dd/yyyy): ________ / ________ / ________ 2. Nature of complaint:
   3a. Has the complainant had any prior communication(s) with the Commission concerning this matter? YES NO 3b. If the answer to 3a is "Yes," name of Commission staff member with whom the complainant or counsel communicated 4a. Has the complainant or counsel provided the information to any other agency or organization, or has any other agency or organization requested the information or related information from you? YES NO 4b. If the answer to 4a is "Yes," please provide details. Use additional sheets if necessary.

Does this complaint relate to an company / entity of which the complainant is or was an officer, director, counsel, 5a. employee, consultant or contractor? YES NO 5b. If the answer to question 5a is "Yes," has the complainant reported this violation to his or her supervisor, compliance office, or any other available mechanism at the entity for reporting violations? YES NO 5c. If the answer to question 5b is "Yes," please provide details. Use additional sheets if necessary. 5d. Date on which the complainant took the action(s) described in question 5b (mm/dd/yyyy): ________ / ________ 6a. Has the complainant taken any other action regarding your complaint? YES NO

7. State in detail all facts pertinent to the alleged violation. Explain why the complainant believes the acts described constitute a violation of the Laws administered by Commission. Use additional sheets if necessary.

8. Describe all supporting materials in the complainant's possession and the availability and location of any additional supporting materials not in complainant's possession. Use additional sheets, if necessary.

9. Describe how and from whom the complainant obtained the information that supports this claim.

10. Identify with particularity any documents or other information in your submission that you believe could reasonably be expected to reveal your identity and explain the basis for your belief that your identity would be revealed if the documents were disclosed to a third party.

11. Provide any additional information you think may be relevant.

D. WHISTLEBLOWER'S DECLARATION *
I declare that the information contained herein is true, correct and complete to the best of my knowledge, information and belief. I fully understand that I may be subject to misstatement, if, in my submission of information to the Commission, I knowingly and willfully make any false, fictitious, or fraudulent statements or representations, or use any false writing or document knowing that the writing or document contains any false, fictitious, or fraudulent statement or entry.

Name of Complainant
Signature
Date

• You must sign this Declaration if you are submitting this information pursuant to the Commission's Whistleblower Regulations to be considered for whistleblower protection, you do not need to sign this Declaration.

(No. Sy/SECP/8/13)

( Usman Hayat )
Secretary to the Commission