Lahore: The Securities and Exchange Commission of Pakistan (SECP) has suspended the asset management services license of the National Asset Management Company Limited (NAMCO) to manage public funds and has imposed a penalty of one million rupees on NAMCO, and of 150,000 rupees on each of its directors for failing to comply with various regulatory requirements.
NAMCO is currently managing one closed-end fund, i.e. NAMCO Balanced Fund (NBF) and one open-end scheme, i.e. NAMCO Income Fund (NIF) with net assets of Rs1081.87 and Rs115.28 million respectively.
The major transgressions of the company include its failure to comply with the minimum equity requirement, non-conversion of NAMCO Balanced Fund(NBF) into an open-end scheme despite approval of its certificate holders in January 2013, non-adherence of NAMCO Income Fund (NIF) to minimum prescribed fund size, and failure to appoint CEO, and directors to the board within the prescribed time period.
While taking cognizance of the ongoing noncompliance, the SECP issued show-cause notices on November 1, 2013 and February 7, 2014 to the NAMCO’s board of directors, and after completing the due process of law, and giving various opportunities to the company to explain itself, it was established that NAMCO knowingly and willfully violated the provisions of the prevalent regulatory framework.
Therefore, in order to protect the interest of unit/certificate holders, the SECP has suspended NAMCO’s license for carrying on the business of asset management services, and has directed the MCB Financial Services Limited (MCBFSL), the trustee of NIF and NBF, to immediately take control of both funds and arrange for the transfer of their management rights to another asset management company.
These enforcement proceedings speak volumes for the SECP’s commitment to protecting the interest of investors, and for promoting the mutual funds industry, by initiating appropriate proceedings against the delinquent participants of the industry.