ISLAMABAD: The Senate Standing Committee on Finance and Revenue will review the current status of process of de-mutualisation of stock exchanges along with details of audits under progress today.
“Demutualization is the process by which a customer-owned mutual organization or co-operative changes legal form to a joint stock company” a well- placed official source at Finance Ministry told Customs Today that process is sometimes called stocking or privatization and as part of the demutualization process, members of a mutual usually receive a windfall payout, in the form of shares in the successor company, a cash payment, or a mixture of both.
The source said that there were three general methods in which an organization might demutualize, full demutualization, sponsored demutualization, and into a mutual holding company (MHC). “In any type of demutualization, insurance policies, outstanding loans, etc., are not directly affected by the organization’s change of legal form” the source observed.
The source described that the mutual completely converted to a stock company, and passed on its own stock, cash, and policy credits to the members or policyholders in a full demutualization. “A sponsored demutualization is similar; the mutual is fully demutualized and its policyholders or members are compensated and difference is that the mutuality is essentially bought by a stock corporation” the source added saying that the mutual holding company was a hybrid concept, part stock company and part mutual company and technically, the members still own over 50% of the company as a whole because of this, they were generally not significantly compensated for what would otherwise be viewed as loss of property.
On the other hand another source at Finance Committee Secretariat disclosed agenda of today’s meeting of the committee to Customs Today and said that it would discuss work upon relationship of the Securities and Exchange Commission of Pakistan (SECP) with institutes of corporate governance.
“These institutions include the State Bank of Pakistan (SBP), Competition Commission of Pakistan (CCP) and others” the source added.
The source added that committee would discuss on the current engagement structure of SECP with SBP regarding protection of depositors along with measures taken by SECP for the improvement in this regard.
The source said that committee would also discuss the commodity exchange performance of SECP, measures to be taken to make it more effective and relevant.
The source observed that committee would take up the issue of quantum of loss if any, to the economy, details of risk management and precautionary measures employed by SECP to avoid any drastic movement in future.
The committee will also get briefing on role of SECP in protecting customer rights of Mudarabah companies, actions to be taken against unregistered companies and number of registered companies.
The source said that committee would also get briefing on measures to gauge the performance of SECP during a given year and determining criteria for evaluation.
