SECP Shares Draft VC Bill, Simplifies Rules for Startups

Proposed law seeks to expand risk capital for startups, attract domestic and foreign investment and introduce a simplified regulatory framework for venture capital funds and managers The Securities and Exchange Commission of Pakistan (SECP) has shared the draft Venture Capital (VC) Bill with the Board of Investment (BOI) for public consultation, as the government moves to establish a dedicated regulatory framework for venture capital and improve access to funding for startups and high-growth businesses. The proposed legislation is aimed at increasing access to risk capital, attracting domestic and foreign investment, supporting startup expansion, generating employment and contributing to economic growth, according to a statement issued on Monday. The draft has been prepared in line with a federal government initiative that tasked the SECP with developing a standalone legal framework for venture capital and addressing funding constraints faced by startups and innovative businesses. Pakistan's startup, technology and innovation sectors have significant growth potential but continue to face limited access to formal venture capital. Much of the existing investment activity is structured offshore or operates outside the domestic regulatory framework. The proposed bill seeks to address these gaps by establishing a simpler and more transparent regulatory framework for venture capital funds and fund managers. It provides for light-touch licensing and registration requirements, simplified operational structures and defined governance and reporting standards. SECP Chairperson Dr Kabir Ahmed Sidhu said the proposed legislation would help channel private capital towards emerging businesses in Pakistan. 'The bill recognises the high-risk and innovation-driven nature of venture capital and seeks to reduce regulatory barriers while ensuring effective governance and investor protection,' he said. Following the sharing of the draft with the BOI, the SECP and BOI will conduct consultations with key stakeholders, including startups, fund managers, legal and financial experts, the State Bank of Pakistan, Pakistan Stock Exchange and relevant industry associations. The draft will subsequently proceed through the legislative process after incorporating feedback received during the consultation phase.