This is brief description of my efforts and status of my recommendations for improvement in the company laws of Pakistan.

1. Status of recommendations made for
improvement in Company Law of
Pakistan
By
Sayyid Mansoob Hasan
Draft Companies Bill, 2015
Draft Companies Bill, 2016
Companies Ordinance, 2016
(Challenged)
Companies Bill, 2017
Companies Act, 2017
(Enacted)

2. Sayyid Mansoob Hasan
• FCMA – Fellow Member of Institute of Cost & Management
Accountants of Pakistan
• ACIS – Associate Member of Institute of Corporate Secretaries
of Pakistan
• Accredited Mediator – Accredited by Pakistan Mediators
Association
• Managing Partner MANSOOB & CO.
Cost & Management Accountants
Management Consultants
Mediators & Arbitrators

3. Preamble
• Ever since the SECP started public consultation on Company Laws in Pakistan I
gave my feedback on the proposed drafts and bills of Company Law and made
many specific recommendations for improvement in the Company Laws for
improvements in the legal environment and the governance process.
• The process started from meetings at the FPCCI and Chambers in January 2016
through Seminars in ICMAP and meetings with SECP officials to hearings by the
Standing Committee on Finance of the Senate of the Islamic Republic of Pakistan
in April 2017.
• As the law has been finalized and enacted, I would like to share with you the
status of my recommendations. Here I would like to personally thank Mr. Afzal
Imam and Mr. Ikram Afzal (members of ICMA Pakistan) for providing me support
during the process, and ICMA Pakistan for facilitating and supporting me to
present these recommendations from the platform of ICMA Pakistan.
• The following are the specific recommendations made in addition to other
recommendations in the improvement of the law:

4. S# Recommendation
Accepted by SECP
Remarks
Yes No
1 Protection of Non-Executive
Directors
Yes - See section 181 of Companies Act, 2017
2 Representation of Women on the
Board of Directors
Yes - See section 154 of Companies Act, 2017

5. S# Recommendation
Accepted by SECP
Remarks
Yes No
3 Duties of Auditors:
Without reporting on potential frauds and
financial mismanagement the so-called audit
report is NOT an Audit Report BUT an
“Accounting Compliance Report” and of no use
for shareholders who are not involved in day to
day activities of the company.
3a To report “Book Entry” transactions - No
3b Securities sold at less than purchase
price
- No
3c Personal expenses of directors
charged to revenue account
- No
3d To report transactions which could
have any negative effect on the
functioning of the company
- No
3e To report frauds committed against
the company by officers or
employees of the company, directly
to SECP
- No

6. S# Recommendation
Accepted by SECP
Remarks
Yes No
4 Accountability of Auditors:
To punish the partner or partners of
the audit firm to have acted in a
fraudulent manner or abetted or
colluded in any fraud by or in relation
to or by, the company or its directors
or officers.
- No After the fall of Enron and World Com the world
strengthened their audit processes and made
auditors more responsible. In Pakistan, it
happened otherwise the auditors had put all
the responsibility on the shoulders of
management and freed themselves of all
responsibilities. Technically such a report which
is not owned by the auditors themselves in not
worth more than a piece of paper.

7. S# Recommendation
Accepted by SECP
Remarks
Yes No
5 Restriction on Auditors:
Prohibition to perform Non-Audit
Services by the auditors directly or
indirectly
- No Audit firms through their “Associated”
Consulting Firms provide consulting services
which is practically the main source of income
for them. This can be seen as an “Reward” for
giving cleaner Audit Report.

8. S# Recommendation
Accepted by SECP
Remarks
Yes No
6 Prevention of Monopoly in Auditing - No Finance Minister being a Chartered Accountant
and Chairman SECP being a Chartered
Accountant, they would only protect the
monopoly of Institute of Chartered Accountants
of Pakistan despite history of serious blunders
and failures in reporting actual financial
condition of listed companies, banks, insurance
companies, modarabas and NBFCs by all the
leading Chartered Accountant Firms in Pakistan.

9. S# Recommendation
Accepted by SECP
Remarks
Yes No
7 Equal rights for Practicing CMAs and
CMA firms for financial audit
- No ICAP and the so called Big 4 are as timid as a
Kiwi and are afraid of “Genuine Competition”.
They are afraid of being knocked down
professionally in a short time. Instead of
working together for promotion of Good
Governance and better management practices
they keep defending their Monopoly in audit
for obvious reasons.

10. S# Recommendation
Accepted by SECP
Remarks
Yes No
8 Simplification and shortening of
procedures for licensing of
companies under Section 42
- No There is a lack of capacity of SECP in regulating
and monitoring of companies formed for
charitable purposes. Charity Commission is
needed like those in UK and Canada.
9 Doing away with NIFT as a time and
money wasting procedure
Yes - New system for user registration and company
incorporation has been introduced by SECP

11. God bless Pakistan