SECP considering conversion of physical shares into book-entry form

The Securities and Exchange Commission of Pakistan (SECP) is considering proposal for conversion of physical shares into a book entry form.

As per SECP, in order to minimize shareholding disputes and make the entire process of holding, monitoring, and transferring of shares much easier, cost-efficient and transparent, the SECP is considering a proposal requiring all the public listed, public unlisted, public interest and private limited companies to have their shares in book-entry form in compliance with Section 72 of the Companies Act, 2017.

The SECP said that shares held in the book-entry form shall have the same rights and privileges as shares held in physical certificates form. Once notified, all companies required to replace their physical shares with book-entry form shall apply to a depository, licensed by the SECP for conversion of physical shares and further issuance of shares in the book-entry form. The depositary shall prescribe procedures for such conversion and issuance of shares including documentation required process to be followed and applicable fee/charges.

SECP added that the handling of shares in case of corporate actions such as the issue of bonus/ right shares and transfer or selling shares would be much easier if shares are converted into book-entry form. Book-entry securities can be pledged to a bank to obtain financing against them.

Furthermore, it would help to reduce the risk and cost associated with storing of physical share certificate which is susceptible to be lost, stolen, and or damaged.

SECP invited all stakeholders to provide feedback opinions on the proposal before May 20, 2021.