Real-estate companies taking advances from the public for projects for development and construction of residential and commercial buildings will be bound to obtain approval of the Securities and Exchange Commission of Pakistan (SECP).
Informed sources said that under this year”s Companies Act, real-estate companies soliciting advances will be required to make their incomes in accordance with the International Financial Reporting Standards (IFRS). Moreover, escrow accounts to be maintained for a real-estate project will not be subject to any attachment except for the purpose of the project.
According to Section 456 of the Companies Act, any company inviting advances from prospective buyers must comply with the provisions of this section in addition to those provided in other provisions of this Act.
A company engaged in a real-estate project will not announce the project unless it has obtained the Commission”s approval, and of the authorities concerned, in accordance with applicable general, special and local laws applicable to the area under which the project is being developed or undertaken to the satisfaction of the Commission, and subject to any additional requirements to be notified.
A company engaged in real estate project shall not make any publication or advertisement of real estate projects, unless it has obtained approval from the Commission, and all necessary approvals, permissions and NOCs from the authorities in accordance with relevant general, special and local laws applicable to the area of the project. These must be in satisfaction of the Commission and subject to additional disclosure requirements to be notified.
A company engaged in real estate project will not accept any advances or deposits in any form against any booking to sell or invite buyers to purchase any land, apartment or building in any real-estate project or part of it, unless it has obtained the approval of the Commission, and all other necessary approvals from the authorities.
A company engaged in real estate project must maintain and preserve the books of account and records in the manner specified; deposit any sum obtained from allottees from time to time, in a separate escrow account opened in the name of the project; comply with any directions notified by the Commission and the accounting framework.
The escrow accounts must be dedicated exclusively to the carrying out of the project and no attachment will be imposed on the payment of the escrow accounts for the benefit of creditors of the real-estate company.