The Securities and Exchange Commission of Pakistan (SECP) will constitute a divestment committee to facilitate and complete the process of divestment of shares of the stock exchange in a transparent manner keeping in view interest of the capital market. Sources said that the recently issued SRO.935(1)/2016 has amended Stock Exchanges (Corporatization, Demutua-lization and Integration) Regulations, 2012.
The SECP has issued notification as it is expedient and necessary to provide for matters related to demutualization and integration of the stock exchanges pursuant to the Stock Exchanges (Corporatisation, Demutualiz-ation and Integration) Act, 2012 and further measures for transitional matter arising from the integration of the stock exchanges and for the matters connected therewith or ancillary thereto. Provided that the commission may, in the interest of capital market, relax the shareholding limit on the leading financial institution or strategic investor of the consortium. Provided further that a local financial institution can become an anchor investor only as part of a consortium subject to the condition that it can acquire directly or indirectly, not more than five per cent of total issued share capital of the exchange.
The commission shall constitute a divestment committee through notification, comprising of members including four elected directors of the exchange; six initial shareholders of the exchange or known market experts, nominated by the commission; chairman of the board of directors of the exchange. The chairman of the divestment committee shall be elected in the first meeting from amongst the members of the divestment committee for chairing the proceedings of the divestment committee.
The divestment committee immediately after its constitution shall take necessary steps under these regulations for the sale of not more than forty percent of total issued share capital out of the shares of the exchange lying in the blocked account and may also perform such functions for the sale of shares other than those lying in blocked account.
The exchange and the divestment committee shall complete the entire process regarding sale of shares of the Exchange within six months from the date of constitution of the divestment committee by the Commission:
Provided that the commission may upon application by the divestment committee, setting out reasons for not being able to comply with six months period, grant one time four months extension for completion of the process. The divestment committee shall keep the commission apprised of the progress being made for divestment and shall at least submit a monthly progress report to the commission.
The divestment committee shall arrange for a fresh valuation of the exchange for its core, non-core and consolidated operations based on the discounted cash flow or net asset value of the exchange, or any other internationally accepted method of valuation undertaken by a valuer approved by the commission and the cost of such valuation, including all ancillary costs, shall be borne by the exchange.
The divestment committee shall invite expressions of interest from potential investors through advertisement in newspapers of national and international coverage, engagement of financial consultants and/or approaching potential investors directly, for the purposes of purchase of either core or consolidated operations of the exchange as determined by the divestment committee.
The divestment committee shall ensure that the exchange shall provide all assistance to the eligible investors and State Bank of Pakistan for carrying out due diligence of the Exchange for placing bids for acquiring shares of the Exchange and where required the Commission shall facilitate the due diligence process. On the basis of bids received, the divestment committee shall, where required, negotiate a price with the eligible investors for the sale of shares not more than forty percent of total share capital out of the shares lying in the blocked account, the SECP added.
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