The SECP's latest amendments to the Companies Act 2017 introduce significant changes to corporate governance requirements. We break down the most important updates and their practical implications for listed and private companies.
Pakistan's corporate landscape continues to evolve as the Securities and Exchange Commission of Pakistan (SECP) implements further reforms to the Companies Act 2017. The most recent amendments, notified in early 2025, target three areas: board composition requirements, related-party transaction disclosures, and simplified procedures for small companies.
Board Composition
Listed companies must now ensure that at least one-third of their board consists of independent directors. The definition of "independence" has been tightened to exclude any person who has been an employee of the company or its affiliates within the preceding five years.
Related-Party Transactions
The amendment requires companies to seek prior approval from disinterested shareholders for related-party transactions exceeding PKR 50 million. The approval process must follow the new disclosure template issued by the SECP.
Practical Steps
Companies should review their articles of association and board charters to ensure compliance before the 30 June 2025 deadline. Non-compliance can result in penalties of up to PKR 5 million and potential director disqualification.
Disclaimer: This article is for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact our team.