ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has given the green light to proposed changes in the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. The proposal will now be forwarded to the Finance Division for legislative approval.

Originally introduced in July 2020 through the Modaraba Ordinance (Amendments) Bill 2020, these reforms had passed through the Standing Committee on Finance and Revenue before being presented in the National Assembly. However, with the assembly’s dissolution in August 2023, the proposal was left pending.

SECP has now revisited the amendments, actively consulting stakeholders before finalizing a revised proposal. The updated reforms focus on expanding industry growth, strengthening investor rights, and improving regulatory frameworks in the modaraba sector.

Key amendments include introducing unlisted modarabas to boost financial resource mobilisation and performance-based profit sharing. Additionally, governance provisions will be aligned with the Companies Act, allowing special resolutions for management changes and ensuring investor protection through better access to legal remedies.

Further changes aim to enhance regulatory oversight by granting SECP greater authority in disciplinary matters, converting certain criminal offences into civil violations for improved enforcement, and dissolving the Modaraba Tribunal, transferring its responsibilities to high courts and session courts.

These revisions are expected to modernise the Islamic financial sector, enhance transparency, and facilitate ease of doing business. The government will now review the proposal for potential enactment.