The Securities and Exchange Commission of Pakistan (SECP) has implemented amendments to the Companies (Further Issue of Shares) Regulations, 2020, aiming to streamline the right issuance process and enhance transparency in the capital markets.
After extensive consultations with stakeholders and the general public, the amendments have been introduced to simplify the right issuance process, applying standardized disclosure and reporting requirements to all right issues, irrespective of size.
Under the revised regulations, issuers are now required to seek comments from both the Pakistan Stock Exchange (PSX) and SECP on the draft offer document, ensuring investors have access to comprehensive information regarding the issuer, specific risk factors, and their potential impact on company operations and performance.
Moreover, the amendments streamline the requirement for directors and substantial shareholders to subscribe to the right issue or arrange for subscription of their entitled shares. Dissenting directors and shareholders are no longer obligated to submit an undertaking, allowing their portion of the right entitlement to be underwritten alongside the portion offered to the general public.
Additionally, specific exceptions have been introduced to facilitate the issuance of shares contingent upon future events, addressing practical challenges faced by applicants seeking approval under section 83(1)(b) of the Companies Act, 2017.
Furthermore, restrictions on the sale of shares after issuance have been revised, with sponsors and associated companies now subject to a two-year restriction, while other individuals face a six-month restriction, aimed at curbing discretionary interpretation in applying exceptions.
As a result of these amendments, the Companies (Further Issue of Shares) Regulations, 2020, will now exclusively apply to listed companies, with separate regulations specified by the SECP earlier this year for unlisted public and private limited companies.
These regulatory changes signify a significant advancement in strengthening capital markets and safeguarding investor interests. By promoting transparency and accountability, the SECP aims to bolster investor confidence and foster sustainable growth in Pakistan’s corporate sector.