Daily Times

The Securities and Exchange Commission of Pakistan (SECP) on Thursday notified amendments in the Corporate Restructuring Companies (CRCs) Rules, 2019. The amendments made in light of promulgation of the Corporate Restructuring Companies Act 2021, are aimed at fostering conducive environment for corporate restructuring companies, an SECP news release said on Thursday. Corporate restructuring companies specialize in acquiring nonperforming assets (NPA) from distressed financial institutions, leveraging their expertise to efficiently manage and recover the same. The CRC sector plays a key role in minimizing stressed assets in the banking sector through market-led solutions, easing balance sheet burdens and enhancing economic stability. The subject rules have been amended in consultations with the State Bank of Pakistan (SBP), International Finance Corporation and public at large. Notable amended provisions include the establishment of trusts, comprehensive procedures for liquidation of trusts by CRCs, provisions pertaining to the Corporate Restructuring Board (CRB) encompassing its composition, processing/approval of schemes being presented by CRCs, appointment matters, governance, code of conduct, functions and budgetary allocation for operational efficacy. It may be mentioned that the subject amendments related to trust liquidation enable CRCs to efficiently acquire non-performing assets (NPAs) from financial institutions and facilitating funding for such acquisitions by segregating risks and rewards, thereby ensuring appropriate compensation for investors while offering the potential for substantial returns. “Simultaneously, the CRB amendments aim to simplify the regulatory approval process for the scheme for arrangement. In essence, the notified amendments are poised to notably improve the rehabilitation process for distressed entities, offering greater opportunities for companies to restructure and restore profitability, ultimately fostering enhanced economic stability,” the news release said.