ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced major changes in the Public Offering Regulations to provide key framework governing public offer of shares, debt securities and units of REIT Schemes.
In this regard, the SECP has issued draft amendments to the Public Offering Regulations, 2017 and Public Offering (Regulated Securities Activities Licensing) Regulations, 2017, for initiating a final round of public consultation.
Notification of the draft amendments follows an extensive SECP driven consultation process including multiple sessions with key stakeholders, including PSX, CDC, NCCPL, listed issuers, consultants, securities brokers, banks, DFIs, potential IPO companies, REIT Management Companies, Shariah advisors, credit rating companies, Pakistan Stock Broker Association and MUFAP.
The draft amendments are aimed at addressing demand and supply side IPO issues, by streamlining the IPO process, reducing IPO processing time to 14 working days, removing duplication in listing and prospectus application, facilitating issuers in faster and cheaper access to capital, introducing more efficient price discovery mechanism, simplifying and strengthening disclosure requirements, increasing outreach and making the IPO journey smoother through effective use of technology and market infrastructure.
Amendments are also proposed for democratizing the book building mechanism, whereby concept of book runner is replaced to enable all eligible participants to place bids directly during the book building process and onboard bidders. The 100% book building mechanism is also proposed to be discontinued to encourage participation of underwriters for the retail portion at the strike price. Furthermore, minimum bid amount is being increased from Rs 1 million to Rs 5 million, and the book building price band is reduced from 40% to 20 percent. For greater retail participation, a new clawback provision is also envisaged to allow increasing allocations to the retail segment up to 25% in the event of oversubscription of the IPO.
Banks are being allowed to act as CTI for public offering of equity securities, with the condition that they form a separate subsidiary for this function within 5 years. The role of CTI is also proposed to be enhanced for performing stronger, more effective assessment of the issuer and public offering documents.
The revised regulations said that, Development Finance Institution and Investment Finance Company can only act as Consultant to the issue in case of public offering of debt securities and listings on the Growth Enterprise Market.
A Scheduled Bank can only act as Consultant to the Issue in case of public offer of equity securities, public offer of debt securities, and listings on the Growth Enterprise Market. A Scheduled Bank shall incorporate a separate subsidiary for this function within five years from the date of obtaining licence or date of notification of these amendments, whichever is later. The Scheduled Bank, Development Finance Institution and Investment Finance Company having license of Consultant to the Issue shall also be eligible to act as Investment Agent for issuance of debt securities, it added.
Customized procedures and disclosure requirements for public offering of REIT units, GEM companies, short term debt securities and listing of shares of local companies outside Pakistan are being introduced to expand available capital market asset classes. To promote shelf registration arrangements and facilitate issuance of short-term corporate debt securities, simplified regulatory review process for supplement to the prospectus is also proposed. Secondary offerings by already listed companies and issuance of debt securities are also being facilitated by simplifying disclosures and making appointment of CTI voluntary for such transactions.
The proposal also advocates effective use of technology to further streamline the IPO process, including introduction of QR codes for accessing prospectus and financial accounts, complete transition to e-IPO applications starting from July 1, 2025, acceptance of electronic signatures, and submission of listing and prospectus applications via the online platform PRIDE.
Copyright Business Recorder, 2025
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