The government expects to save approximately Rs250.54 billion ($895 million) annually through the modernisation of the Companies Act and associated regulatory reforms. Of this, Rs176.96 billion ($632.2 million) will come from updating the law, while Rs73.58 billion ($262.8 million) will be saved through regulatory adjustments, The Express Tribune reported.
The estimates were discussed in a recent meeting of the sub-committee on modernisation of the Companies Act 2017, chaired by Special Assistant to the Prime Minister on Industries and Production, Haroon Akhtar Khan.
During the meeting, Khan emphasized the importance of simplifying the registration process for unlisted companies, citing delays, excessive regulation, and challenges in doing business as key issues hindering corporate growth.
The sub-committee highlighted that the growth of companies has been stunted by regulatory burdens, with the current system imposing excessive control over company activities and limiting innovative corporate financing options.
Pakistan currently has only 523 listed companies, or two per million people, far below the global average. To address this, the sub-committee recommended a comprehensive review of the Companies Act, benchmarking it against international standards.
This review would focus on regulating listed companies and state-owned enterprises, while leaving unlisted companies to be governed by corporate bylaws and contract law, reducing unnecessary regulations.
The modernisation effort aims to eliminate barriers, reduce costs, and improve flexibility for companies, encouraging faster growth and innovation. It also calls for strengthening the Securities and Exchange Commission of Pakistan’s (SECP) enforcement of good governance practices for listed companies.
The reform proposals suggest a reduction in regulatory costs by simplifying the rules for unlisted companies, including the elimination of rigid thresholds for forming and operating companies.
Additionally, the Board of Investment (BoI) has recommended reducing the number of special resolutions required for unlisted companies and removing arbitrary thresholds for private and public companies, ultimately providing greater flexibility for business growth.
