Sale of shares lying in blocked account of bourse: SECP issues procedure for time, manner of offer

The Securities and Exchange Commission of Pakistan (SECP) has issued procedure for time and manner of offer for sale of shares lying in the blocked account of the stock exchange. Through SRO.286 (1)/2017, the SECP in exercise of its powers conferred under section 23 of the Stock Exchanges (Corporatisation, Demutualization and Integration) Act, 2012 (Act No XV of 2012), amended Stock Exchanges (Corporatisation, Demutualization and Integration) Regulations, 2012.
Time and manner of offer for sale of shares lying in the blocked account: The board of directors of the Exchange shall determine the time within which not less than twenty percent of total issued share capital out of shares of the Exchange lying in the blocked account shall be offered for sale.
The offer for sale of shares lying in the blocked account shall be made in accordance with applicable provisions of the Securities Act, 2015, Companies Ordinance and applicable rules and regulations framed thereunder, unless otherwise provided in these regulations or as may be notified by the Commission. The allocation of shares under the book building portion shall be seventy five percent of the offer size and the remaining twenty five percent shares shall be allocated to the retail portion.
The bidders shall give an undertaking along with the bid application that they would subscribe to the shares remaining unsubscribed by the retail investors, if any. Their balance bid money would remain in the book building account with the banker to the book building portion till allotment of unsubscribed shares, if any, of the retail portion to them on pro-rata basis.
In case the retail portion is fully subscribed, the balance bid money shall be immediately refunded to the successful bidders. The retail portion of the offer may not be underwritten. The following persons shall be eligible for participating in the book building process including a financial institution; a pension fund authorised under the Voluntary Pension System Rules, 2005; a fund established under the Collective Investment Scheme under the Non-Banking Companies (Establishment and Regulation) Rules, 2003; a company which has a history of investing in the securities market; a high net worth individual and a non-resident Pakistani individual holding Overseas ID Card (NICOP) issued by the National Database and Registration Authority:
Provided that the requirement of sub-regulation (a) of regulation 39 shall not be applicable to persons which have TRE certificate holders only as their subsidiaries. For the purposes of this regulation a "high net worth individual" includes a nonresident Pakistani individual and means any individual who is on the Active Taxpayer List of the Federal Board of Revenue; at the time of registration with the book runner submits his National Tax Number; makes payment for the bid through a banking instrument in his own name; has annual taxable income not less than two million rupees; is registered with the book runner at least three days prior to commencement of book building; has experience of investing in the securities market; makes a minimum bid of three million rupees in book building and provides a declaration on non-judicial paper that he is not a connected person of a TRE certificate holder. Provided that for the purpose of this regulation non-resident Pakistani individuals shall not be required to comply with relevant clauses.
The minimum number of bidders required to participate in the book building process shall be determined by the board of directors of the Exchange. The minimum bid size for book building shall be three million rupees. An eligible person under sub-regulation (8) shall not make more than one bid either severally or jointly and in case of non-resident Pakistani he shall furnish such information as required by the Commission.
The book runner for the offer for sale shall he a scheduled bank or a development financial institution notified by the State Bank of Pakistan or any other institution as may be notified by the Commission: Provided that for the purposes of these regulations the book runner shall not be required to be registered with the Commission under regulation 14 of the Book Building Regulations, 2015 but shall comply, mutatis mutandis, with all other applicable provisions of the Book Building Regulations, 2015.
The book runner shall furnish such information for persons in sub-regulation (8) to the Commission on the format specified by the Commission as and when required. Shareholding limits:- Notwithstanding the shareholding limits at any time prior to or after the sale of shares through an offer for sale under these regulations: Foreign persons shall not collectively directly or indirectly acquire or hold more than thirty percent of the total issued share capital of the Exchange; a financial institution shall not directly or indirectly acquire or hold more than five percent of the total issued share capital of the Exchange and any other person shall not directly or indirectly acquire or hold more than one percent of the total issued share capital of the Exchange.
On determination of the time under sub-regulation (1) of regulation 42, the initial shareholders of the Exchange shall in a meeting of initial shareholders, constitute a committee comprising up to 10 initial shareholders or ratify constitution of the divestment committee for offer for sale of shares of the Exchange, SECP added.