Fit and Proper Criteria for Promoters, Board of Directors & CEO of Corporate Restructuring Companies

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
SPECIALIZED COMPANIES DIVISION
POLICY, REGULATION AND DEVELOPMENT DEPARTMENT

No. SC/NBFC-1-204/R/CRCR/2023/ 53
February 06, 2024

Circular No. 6 of 2024

Subject: Fit and Proper Criteria for Promoters, Board of Directors & Chief Executive Officer of the Corporate Restructuring Companies

The Securities and Exchange Commission of Pakistan (the “Commission”), in exercise of powers conferred under section 17 of the Corporate Restructuring Act, 2016 (the “Act”) read with rule 3(1) of the Corporate Restructuring Companies Rules, 2019 (the “Rules”), hereby prescribes the following fit and proper criteria for eligibility assessment of promoters, major shareholders, board of directors and Chief Executive Officer of a Corporate Restructuring Company (CRC): -

1. The Fit and Proper Criteria in relation to a CRC is applicable to the following persons:
    a. The promoters and major shareholders;
    b. the directors of the CRC; and
    c. the chief executive of the CRC.

2. A proposed director or chief executive of the CRC shall not assume the charge of office until their appointment has been approved by the Commission.

3. The application for seeking approval of the Commission under clause (2) shall be submitted by the CRC along with the requisite information required under Annexure “A” and an Affidavit as specified in Annexure “B” of the Circular.

4. The fitness and propriety of any person shall be assessed by taking into account all the relevant factors including but not limited to the following:
    a. Integrity and track record of such person;
    b. Financial soundness of such a person;
    c. Competence and capability of the person; and
    d. Conflict of interest of such person with the business of the CRC.

Provided that clause 4(c) and 4(d) may not be considered while assessing the fitness & propriety of promoters and major shareholders of the CRC.

Provided further that in case the sponsor and major shareholder is a body corporate, in addition to the relevant/applicable clauses, corporate behavior of the said body corporate and integrity & track record of the sponsor and ultimate beneficial owners of such corporate body shall be duly considered.

Explanation: - For the purpose of this clause, the term “ultimate beneficial owner” shall have the similar meaning as defined under 123A of the Companies Act, 2017.

5. The Fit and Proper Criteria is perpetual in nature and a CRC shall ensure compliance with the provisions of Fit and Proper Criteria at all times.

NIC Building, 63 Jinnah Avenue, Blue Area, Islamabad.
Tel: 051-9207091-4, Fax. No. 051-9100473

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
SPECIALIZED COMPANIES DIVISION
POLICY, REGULATION AND DEVELOPMENT DEPARTMENT

i. the directors should be individuals having management or business experience of at least five years at a senior level;
ii. the directors shall have experience and knowledge in any related profession such as banking, accounting, law, internal audit, matters regarding restructuring of companies in distress, financial engineering techniques and skills and capacity to deal with the out of court work etc.
iii. the chief executive should have a minimum experience of seven to ten years in a senior management position, preferably in the regulated financial services sector;
iv. the chief executive should have demonstrated, through his qualification and experience, the capacity to successfully undertake the cognate responsibilities of the position; and
v. where the Commission is not satisfied on sufficiency of the suitability criteria, it may conduct an interview of the chief executive to assess his/her suitability for the position.

d. Conflict of Interest – The promoters, directors and chief executive officer shall not:
i. be the promoter, director or chief executive officer in any other CRC; and
ii. be member or employee of the Corporate Restructuring Board.

Note: The director or the Chief Executive Officer so appointed, who becomes aware of any probable conflict of interest that may be arising in a matter coming up for consideration at a meeting of the Board related to any bank/financial institution or any other company whose Non-Performing Assets are to be acquired, shall disclose nature of his/her interest immediately to the Board and such disclosure must be recorded in writing in proceedings of the Board, and such director or CEO shall not take part in any deliberation or decision of the Board with regard to such matter.

Mujtaba Ahmad Lodhi
Commissioner (SCD)

Distribution:
1. Chief Executive Officers, Corporate Restructuring Companies
2. Ministry of Finance

NIC Building, 63 Jinnah Avenue, Blue Area, Islamabad.
Tel: 051-9207091-4, Fax. No. 051-9100473

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
SPECIALIZED COMPANIES DIVISION
POLICY, REGULATION AND DEVELOPMENT DEPARTMENT

16. My net-worth is not less than twice the amount to be subscribed by me personally (not applicable to a nominee director);
17. I do solemnly declare that no investigations have been initiated against me by any Law Enforcement Agencies.

DEPONENT

The Deponent is identified by me

Signature _______________________
ADVOCATE
(Name and Seal)

Solemnly affirmed before me on this ______ day of ____________ at ______________ by the Deponent above named who is identified to me by ______________, Advocate, who is known to me personally.

Signature _______________________
OATH COMMISSIONER FOR TAKING AFFIDAVIT
(Name and Seal)

NIC Building, 63 Jinnah Avenue, Blue Area, Islamabad.
Tel: 051-9207091-4, Fax. No. 051-9100473