Issuance of right shares: SECP places additional conditions for listed firms

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has placed additional requirements/conditions for the listed companies for issuance of the right shares. The SECP has issued a notification on Wednesday to propose amendments in the Companies (Further Issue of Shares) Regulations, 2020.

According to the SECP, the proposed amendments also aim to balance roles and responsibilities of issuers in a manner that facilitates capital formation while simultaneously promoting protection of the rights of minority shareholders.

The instant draft amendments are accordingly expected to build investor confidence through further transparency, facilitate issuers in further issuance of capital and optimise the capital formation processes under the further issue of capital regime.

SECP notifies draft amendments to listed companies

For the purpose of removing duplication, reporting of allotment of shares in case of right issue is proposed to be deleted and shall be made part of the Form 3 of the Companies (General Provisions and Forms) Regulations, 2018.

In addition to compliance with of the general conditions provided, a listed company issuing right shares shall comply with the following additional requirements:

Under the new regulations, the board of directors of the issuing company shall, prior to announcement of the right issue, ensure that the issuing company, its sponsor(s), promoter(s), substantial shareholder(s) and directors shall not have overdues or defaults irrespective of the amount appearing in the report obtained from Credit Information Bureau.

The company shall prepare and its board shall approve the draft offer document in easily understandable English and Urdu language.

The offer document shall contain all disclosures, as referred to in Schedule I of these regulations and such disclosure should be true and adequate and enable the applicants to take an informed investment decision.

Copyright Business Recorder, 2023