Legal Advice on Website compliance under SECP Guidelines for Public Companies in Pakistan

 Mandatory Website Set-up, Maintenance  and Compliance for Public Companies in Pakistan

Ask the Compliance experts.

Email us at [email protected]

Claim a FREE evaluation report of your website’s legal compliance today!

Introduction: The Securities and Exchange Commission of Pakistan (SECP) recently issued a critical notification, S.R.O. 1196 (I)/2019, on 3rd October 2019, directing all public companies in Pakistan to maintain a functional website with immediate effect. This legal alert outlines the requirements mandated by the SECP and the implications for public companies in the country. It is essential for businesses to understand and comply with these provisions to avoid penalties and ensure transparency in their operations.

Background: The SECP, in the exercise of its powers under Section 510 of the Companies Act 2017, issued the notification S.R.O. 1196 (I)/2019. This notification supersedes previous notifications such as S.R.O. 634(I)/2014, S.R.O. 684(I)/2015, S.R.O. 1222 (I)/2015, circular 43 of 2015, and circular 02 dated February 01, 2019. Additionally, the SECP encourages other companies to maintain their functional websites voluntarily.

Requirements for Public Companies:

1. Placement of Information on Website: Public companies are required to provide specific minimum information in both English and Urdu languages on their websites. This information includes:

a) Profile of Company:

• Vision, mission, principal business, and other permissible activities.
• Status of the company (e.g., PIC, LSC, MSC, or SSC under the third schedule of the Act).
• Company Registration Number/Date and National Tax Number.
• Date/Number of the license issued by the relevant authority (if applicable).
• Addresses of registered office, head office, and branch offices.
• Phone, fax numbers, and a valid email address.
• Details of subsidiaries/associated companies and their website links (if available).

b) Governance:

• Profile of the Board of Directors.
• Shareholding pattern for companies with share capital.
• Name of the Company’s Auditor.
• Name of Legal Advisor.

c) Investor Relations:

• Online form/contact details for handling investors’ complaints and grievances.
• Link to SECP’s investor education portal “JamaPunji” with its logo.
• Corporate Social Responsibility Reports (if any).
• Notices of general meetings, dividends/bonus declarations, and right issues.
• Copy of any notice proposing the appointment of auditors by a member with at least ten percent shareholding in the annual general meeting.
• Sitemap and search facility.

d) Media:

• National/International Awards or recognition (if any).
• Membership of industry associations and trade bodies (if any).
• Any other announcements or clarifications issued by the company.
• Last date of website update.

e) Information on Homepage:

• Link to SECP’s Service Desk Management System’s (“SDMS”) logo with a disclaimer.
• Information of the company’s complaint handling cell and contact person(s).

f) Information of Group Companies:

• Public companies registered as a group under the Group Companies Registration Regulations, 2008 shall place the annual financial statements of their group along with mandatory reports (wherever required).

Additional Disclosure Requirements for Listed Companies: Listed companies have additional disclosure requirements on their websites, in both English and Urdu languages. These include:

g) Election of Directors:

• Notices relating to the election of directors with a statement of material facts.
• Names and profiles of persons chosen from the databank for electing them as independent directors.
• Detailed information on proxies, candidates contesting elections, and shareholder list accessible by candidates intending to contest elections.

h) Investor Information:

• Symbol of the company assigned by the Pakistan Stock Exchange (“PSX”) and website links of PSX.
• Annual reports for the last three financial years.
• Financial highlights for the previous five years.
• Quarterly financial statements of the current and past three years.
• Earnings per share (basic and diluted), price to earnings ratio, and breakup value of shares, dividend payout ratio as per the latest available annual audited financial statements.
• Name and address of share registrar.
• Free float of the company’s shares.
• Rating of the company and instrument (if any).

Placement of Financial Statements: Every listed company must place its annual report, including financial statements and mandatory reports, on its website at least twenty-one days before the annual general meeting and disclose its availability in the notice of the annual general meeting disseminated to company members. Quarterly financial statements and reports must be placed on the website within seven days from the date of board approval. Companies must ensure that financial statements, reports, and other information are available in an internationally acceptable, user-friendly, easily accessible, and downloadable electronic format.

Dissemination of Website Address to PSX: Every listed company must disseminate its functional website address to the Pakistan Stock Exchange (“PSX”) to be made available on the PSX website. In case of any change in the website address, the company must notify the PSX within seven days.

Security Measures for Website: To ensure data security, every company must deploy appropriate measures and safeguards against service attacks, defacements, or any vulnerability that may adversely affect website access or the mandatory information placed on it. In case of maintenance activity, update, or anomaly affecting website access, shareholders must be notified, and full access to the website shall be restored within a reasonable time.

Sequential Order and Relaxation from Requirements: Companies must provide the mandatory information on their websites following the sequential order as specified in the notification. In cases where strict compliance is impractical, companies may apply for relaxation from specific requirements. The SECP will consider such applications subject to appropriate conditions.

Penalties for Non-Compliance: Failure to comply with the notification’s requirements may result in penalties under Section 510 of the Companies Act 2017. The penalties may include level 3 sanctions.

Conclusion: The SECP’s notification, S.R.O. 1196 (I)/2019, mandates public companies in Pakistan to maintain functional websites and provide essential information to stakeholders. It aims to enhance transparency, investor confidence, and accessibility of information. Companies must promptly comply with the notification’s requirements to avoid penalties and demonstrate their commitment to corporate governance and accountability.

Note: This blog is for informational purposes only and does not constitute legal advice. For legal compliance, companies are advised to consult qualified legal professionals at Josh and Mak International 

LEGAL ALERT

Government of Pakistan Securities and Exchange Commission of Pakistan Notification: S.R.O. 1196 (I)/2019

Date: 3rd October 2019

Subject: Mandatory Website Maintenance for Public Companies

Background: The Securities and Exchange Commission of Pakistan (SECP), in exercise of its powers under Section 510 of the Companies Act 2017, has issued a notification (S.R.O. 1196 (I)/2019) to direct every public company to maintain a functional website with immediate effect. The notification supersedes earlier notifications S.R.O. 634(I)/2014, S.R.O. 684(I)/2015, S.R.O. 1222 (I)/2015, circular 43 of 2015, and circular 02 dated February 01, 2019. Other companies are also encouraged to maintain their functional websites.

Requirements:

1. Placement of Information on Website of Public Companies: Public companies must provide certain minimum information in English and Urdu languages on their websites, along with any other material information. The mandatory information includes:a) Profile of Company:
   • Vision, mission, principal business, and other permissible business activities
   • Company’s status (e.g., PIC, LSC, MSC, or SSC under the third schedule of the Act)
   • Company Registration Number/Date and National Tax Number
   • Date/Number of the license issued by the relevant authority (if required)
   • Address of registered office, head office, and all other branch offices
   • Phone and fax numbers of head office, registered office, and branch offices
   • Valid email address
   • Details of subsidiaries/associated companies and their website links (if available)

   b) Governance:

   • Profile of the Board of Directors
   • Shareholding pattern of companies having share capital
   • Name of the Company’s Auditor
   • Name of Legal Advisor

   c) Investor Relations:

   • Online form/contact details for handling investors’ complaints and grievances
   • Link to SECP’s investor education portal “JamaPunji” along with its logo
   • Corporate Social Responsibility Reports (if any)
   • Notices of general meetings, dividends/bonus declarations, and right issues
   • Copy of any notice proposing the appointment of the Company’s auditor(s) by a member with not less than ten percent shareholding in the annual general meeting
   • Sitemap and search facility

   d) Media:

   • National/International Awards or recognition (if any)
   • Membership of industry associations and trade bodies (if any)
   • Any other announcements or clarifications issued by the company
   • Last date of website update

   e) Information to be Provided at Homepage:

   • Link to SECP’s Service Desk Management System’s (“SDMS”) logo with a disclaimer
   • Information of the company’s complaint handling cell and contact person(s)

   f) Information of Group Companies:

   • Public companies registered as a group under the Group Companies Registration Regulations, 2008 shall place the annual financial statements of their group along with mandatory reports (wherever required).
2. Additional Disclosure Requirements for Listed Companies: In addition to the above information, listed companies shall provide the following on their websites, in English and Urdu languages:g) Election of Directors:
   • Notices relating to election of directors with statement of material facts
   • Names and profiles of persons chosen from the databank for electing them as independent directors
   • Detailed information regarding proxies, candidates contesting elections, and shareholder list accessible by candidates intending to contest elections

   h) Investor Information:

   • Symbol of the company assigned by the Pakistan Stock Exchange (“PSX”) and website links of PSX
   • Annual reports for the last three financial years
   • Financial highlights for the previous five years
   • Quarterly financial statements of the current and past three years
   • Earnings per share (basic and diluted), price to earnings ratio, and breakup value of shares, dividend payout ratio as per the latest available annual audited financial statements
   • Name and address of share registrar
   • Free float of the company’s shares
   • Rating of the company and instrument (if any)
3. Placement of Financial Statements:
   • Every listed company shall place its annual report, including financial statements and mandatory reports, at least twenty-one days before the annual general meeting on its website and disclose its availability in the notice of the annual general meeting disseminated to company members.
   • Quarterly financial statements and reports shall be placed on the website within seven days from the date of board approval.
   • Companies shall ensure that financial statements, reports, and other information are available in an internationally acceptable, user-friendly, easily accessible, and downloadable electronic format.
4. Dissemination of Website Address to PSX:
   • Every listed company shall disseminate its functional website address to the Pakistan Stock Exchange (“PSX”) to be made available on the PSX website.
   • In case of any change in the website address, the company shall notify the PSX within seven days.
5. Security Measures for Website:
   • Every company shall deploy appropriate measures and safeguards for the security of its website against service attacks, defacements, or any other vulnerability that may adversely affect website access or the mandatory information placed on it.
   • Shareholders shall be notified in case of any maintenance activity, update, or anomaly affecting website access, and full access to the website shall be restored within a reasonable time.
6. Sequential Order: Companies shall provide the mandatory information on their websites substantially following the sequential order, as enumerated under clauses 1 and 2 of this notification.
7. Relaxation from Requirements: The Commission may, on an application by a company, relax the requirements of this notification if it is satisfied that it is not practicable for the company or a class of companies to comply with them, subject to appropriate conditions.
8. Penalty: Any contravention or non-compliance with the requirements of this notification shall be liable to a penalty of level 3, as provided under sub-section (2) of section 510 of the Companies Act 2017.

For more details, refer to file number EMD/ED/MISC.-I/2016.

Note: This legal alert is for informational purposes only and does not constitute legal advice. Companies are advised to seek legal counsel to ensure compliance with the notification.

****************************End of Update******************************

Original Article dated 2014.

The SECP (Securities and Exchange Commission of Pakistan) through SRO 634 (I)/ 2014 (“notification”) dated July 10, 2014 directed every public listed company and public unlisted company to maintain a functional website with effect from August 30, 2014.These guidelines apply to every public listed company and public unlisted company is required to maintain functional website regardless of the status of their operations and profitability.

Who is excluded?

Listed and public unlisted companies that are yet to obtain certificate of commencement of business, are loss making (current and/or accumulated losses), operationally inefficient or operations have closed shall maintain mandatory website and provide all available information as per Section A, B, C and D of the aforementioned notification.

What your company is required to do for compliance?

• Every Company shall ensure that financial statements, reports and other information, as applicable, are available internationally acceptable user friendly electronic format.
(Reference may be drawn from the requirements of Electronic Transmission Ordinance, 2002.)
• Each listed company, for ease of users, shall ensure that financial statements and reports can be copied to or saved in preferably MS- Word, Excel or PDF format.
• The requisite financial statement, reports, notices shall be placed on the website simultaneously with the dispatch of the same to the shareholders.
• Each Company shall take adequate steps for website security.
(Reference, if deemed appropriate, may be drawn from local and international standards for e.g. principles for security of information systems and networks as recommended by Organization for Economic Cooperation and Development (OECD) and National Institute of Standard and Technology (NIST) Guidelines on securing public web services.)
• As per the requirements of Section 3 (a) of the said notification, listed companies shall place the financial statements and reports on website simultaneously with the dispatch of the notice of annual general meeting to the shareholders.
• The compliance certificate duly signed by the Chief Executive Officer of the Company shall be sent to the Commission within seven days of placement of annual financial statements after duly adopted by the members. Any other changes/ placement of information on the website may be communicated to the Commission by the Company Secretary.
• The preferable format of compliance certificate, in accordance with the requirements of this notification, is given in Annexure A to these Guidelines.

The SECP has been very strict regarding compliance so far.If you are looking for relaxation, we can advise you on the matter once you contact us.The following list notes situations where compliance requirements can be relaxed

10. The application for relaxation from the requirements of the notification shall be made in a manner prescribed under Rule 30 of the Companies (General Provisions and Forms) Rules, 1985 (the “Rules”) alongwith application fee as prescribed under sixth schedule to the Companies Ordinance, 1984.
11. Companies seeking relaxation shall specifically highlight the reason, circumstances, specific nature of the deficient information and time period until the said information (where applicable) shall be available.