The Securities and Exchange Commission of Pakistan (SECP) has shared a draft Venture Capital Bill with the Board of Investment for public consultation, proposing a dedicated legal and regulatory framework for Pakistan’s venture capital industry. The proposed legislation is aimed at improving access to risk capital for startups and high-growth businesses while encouraging greater participation from domestic and foreign investors.
The draft Bill has been prepared under an initiative of the Federal Government, which tasked the SECP with developing a standalone regulatory framework specifically designed for venture capital activity. The proposed law seeks to establish clearer rules for venture capital funds and fund managers while creating conditions that can support the growth of startups, emerging businesses and technology-focused companies.
Pakistan’s startup, technology and innovation sectors have significant growth potential, but businesses operating in these areas have faced challenges in accessing formal venture capital within the country. A substantial portion of investment activity has taken place through offshore or unregulated structures outside Pakistan’s domestic regulatory framework. The SECP’s proposed legislation seeks to address this gap by bringing venture capital activity into a clearer and more structured domestic framework.
Under the proposed Venture Capital Bill, the regulatory system would adopt a relatively light-touch approach to licensing and registration. The framework would also provide simplified operational structures along with defined governance and reporting requirements. These measures are intended to reduce unnecessary regulatory barriers while providing investors and fund managers with greater clarity over the rules governing venture capital activity.
The proposed framework is designed around the characteristics of venture capital, where investors typically provide funding to businesses with significant growth potential but also face higher levels of risk. By creating a dedicated regulatory structure, the SECP aims to support investment in businesses that may require substantial capital during their early and expansion stages but may not have access to traditional financing channels.
SECP Chairman Dr. Kabir Ahmed Sidhu highlighted the importance of the proposed legislation in mobilising private capital towards emerging businesses in Pakistan. He said the Bill recognises the high-risk and innovation-driven nature of venture capital and aims to reduce regulatory barriers while maintaining effective governance and investor protection.
The proposed law could provide a formal pathway for investors seeking opportunities in Pakistan’s startup ecosystem. A dedicated framework may also give fund managers greater certainty regarding registration, operations, reporting and governance, potentially making the domestic market more attractive for venture capital activity.
The legislation also seeks to encourage foreign investment. By establishing a transparent regulatory framework, the government expects to create an environment in which international investors can participate more easily in Pakistan’s emerging business sector. Increased access to both domestic and foreign risk capital could provide startups with additional funding options as they develop products, expand operations and pursue growth.
The Federal Government’s initiative also links the development of the venture capital sector with broader economic objectives. Greater investment in startups and high-growth businesses could support the creation of employment opportunities while contributing to business development and economic activity.
The draft Bill has now entered the consultation stage. The SECP and Board of Investment are expected to engage with a range of stakeholders before the proposed legislation moves forward through the formal legislative process. The consultation is intended to gather feedback on the proposed regulatory framework and identify areas that may require further consideration.
Stakeholders expected to participate include startups, venture capital fund managers, legal and financial experts, the State Bank of Pakistan, Pakistan Stock Exchange and relevant industry associations. Their input will be considered as the authorities review the proposed framework before it advances to the next stage.
The consultation process will therefore be an important step in determining how Pakistan’s venture capital market is regulated. The SECP’s proposal seeks to balance easier access to risk capital with governance and investor protection requirements, while avoiding a regulatory structure that could discourage investment in high-growth businesses.
If enacted, the proposed Venture Capital Bill would establish a dedicated legal foundation for venture capital activity in Pakistan and provide a formal framework for funds and fund managers. The initiative reflects efforts to strengthen domestic funding channels for startups and emerging businesses while encouraging greater participation from private and international investors.
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