Key shareholders, executives: SECP empowered to collect information in Pakistan

ISLAMABAD (August 21 2008):

The Securities and Exchange Commission of Pakistan (SECP) has been legally empowered to collect information of major shareholders and key executives of the Foreign Private Equity and Venture Capital Entities (FPE&VCEs) being registered with the commission.Under the draft Private Equity and Venture Capital Fund Regulations issued by the SECP on August 19, (FPE&VCE) shall disclose to the Commission the names, particulars and such other information as the Commission may specify from time to time, with regard to its promoters and directors, major shareholders and key executives who are Pakistani nationals or foreign nationals of Pakistani origin.According to the draft, an entity set up outside Pakistan for the purpose of managing or investing private equity or venture capital, may make investments in Pakistan if it has, for information purposes, been registered with the Commission as a (FPE&VCE), after due compliance with such conditions as may be Specified for registration.Such (FPE&VCEs) may hold, invest or manage in Pakistan only such funds as have been collected outside Pakistan and have been transferred to Pakistan for the purpose of investment therein. Repatriation of the principal amounts so transferred to Pakistan and all gains accruing thereon shall be in accordance with the applicable laws of Pakistan.The rules said that any entity that is incorporated outside Pakistan and has registered with the Commission is exempt from compliance with these Regulations except for this Regulation and subject to the condition that it will not invite any investments from individuals or institutions in Pakistan. For the registration of a PE &VC Fund, the regulations have also elaborated investment conditions and restrictions for a fund.Under the regulation, a "Fund Management Company" (FMC), would be established as a company licensed by the Commission to provide PE & VC Fund Management Services.An FMC may raise capital for a fund from any eligible investor whether Pakistani or foreign and whether a resident or a non-resident, through issue of Units in accordance with the laid down conditions: An FMC shall neither make nor accept an offer for subscription to the Units of a Fund of an amount of less than Rs 25 million.Every investor approached for raising capital for a Fund shall be provided, along with the Placement Memorandum, a declaration to be submitted to the FMC after execution by such investor stating that the investor has carefully examined the Placement Memorandum and that the investor possesses the capacity to undertake the risks as mentioned in the Placement Memorandum.All investments made or to be made out of the fund shall be made in a Private Equity Undertaking subject to laid down conditions. The FMC shall disclose the detailed investment strategy at the time of application for registration of the Fund in the Placement Memorandum and Investible Funds may be invested in a Connected Person of either the FMC or the Trustee, only if adequate disclosure to this effect has been made in the investment strategy as stated in the Placement Memorandum.In the event that any of the conditions is breached, the FMC shall promptly inform the Unit Holders and the SECP of the magnitude of the breach, the cause of the breach, and the proposed method of rectification; and rectify and restore compliance with the relevant conditions within such period as the Commission may specify after being informed of the breach.No Trustee or FMC, in relation to the Fund vested in or managed by it, and no director, officer, employee, agent or auditor thereof in any document, report, return, accounts, information or explanation required to be furnished pursuant to these regulations, or in any application made under these regulations, make any statement or give any information which he knows or has reasonable cause to believe to be false or incorrect or omit any material fact, the regulations added.