The Securities and Exchange Commission of Pakistan (SECP) has made it mandatory for Collateral Management Companies (CMCs)/Agriculture Promotion Companies to biennially review the standard operating procedures to evaluate the adequacy and effectiveness of their accredited warehouses.
The SECP notified S.R.O. 1897 (I)/2022 to issue draft amendments to the Collateral Management Companies Regulations, 2019 on Wednesday.
According to the regulations, the Collateral Management Company (CMC) means an Agriculture Promotion Company registered with the Commission having a principal line of business as managing produce as collateral or engaged in any other activity connected with or related to any produce or any other activity as may be notified by the Commission.
The CMC may engage in activities including warehousing, i.e. provision of quality storage and preservation services for a range of agricultural commodities, issuance of warehouse receipts for agricultural commodity financing, devising a mechanism for pledging in favour of eligible pledgee, the depositor’s produce held with the warehouse operator against which electronic warehouse receipt has been issued, stock audit, evaluation, and verification services, and accreditation of warehouses and any other activity as approved by the Commission.
A CMC may grant a certificate of accreditation to a warehouse subject to the fulfilment of laid down minimum conditions. The warehouse shall have all necessary permissions and meet the requisite standards in accordance with applicable laws within the jurisdiction the warehouse is situated for carrying out the business of warehousing.
Upon accrediting a Warehouse, the CMC shall forthwith inform the Commission and shall share the copy of accreditation, along with location, capacity, kind of produce the Warehouse is suitable for storing, and other relevant information.
Under the amendments, the CMC shall biennially review the SOPs to evaluate their adequacy and effectiveness in covering the relevant risks, and applicable legal and operational requirements, and make changes where necessary with the approval of its board of directors and subject to consultation with stakeholders and vetting by a professional having relevant expertise.
The CMC shall prepare warehousing guidelines and SOPs in accordance with the applicable laws and as much as possible meet the international standards for the accreditation, management, and inspection of warehouses and have the same approved by the Commission.
The CMC shall appoint one or more examiners to undertake an inspection of the warehouse to ensure that all the conditions for accreditation have been fulfilled including the existence of adequate infrastructure, technical capacity, financial standing, and other requirements and that the Warehouse Operator has met all the conditions stated in schedule II provided that the CMC shall appoint third party examiners for inspection.
Source: Pro Pakistan