SECP to Simplify Process of Rehabilitating Distressed Entities

In a bid to streamline investment processes for Corporate Restructuring Companies (CRCs) and provide greater flexibility for restructuring operations, the Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to the Corporate Restructuring Companies Rules, 2019. The draft amendments have been placed on SECP’s website for public consultation. The key proposed changes include procedures for raising funds and extending financing for the acquisition, trust liquidation, composition, and governance of the Corporate Restructuring Board (CRB) and its functions and budgetary allocations. The proposed amendments will simplify the process of rehabilitating distressed entities by providing greater flexibility for CRCs to undertake agency functions for recovery and restructuring. They will also streamline the process of getting regulatory approvals for the Scheme of Arrangement from the CRB. The amendments prescribe procedures for the composition, appointment, and governance of the CRB, including a Code of Conduct for its members and staff, etc. These measures are aimed at ensuring a diverse representation of experts from relevant fields, transparency, and accountability in the decision-making process. Under the revised procedure, the trust may be liquidated by the occurrence of any of the specified events subject to the approval of a three-fourth majority of beneficiaries of the trust.