SECP issues private placement of Securities Rules 2017

Securities and Exchange Commission of Pakistan (SECP) Monday allowed companies (excluding single member company) to offer and issue its debt securities through private placement. According to the SRO 297(1)/2017 issued here on Monday, the SECP has issued Private Placement of Securities Rules, 2017.
The rules shall apply to the companies proposing to offer their securities by way of private placement and shall not apply to securities issued by the Federal or Provincial Governments and private placement of securities by a special purpose vehicle or body corporate specifically setup by the Federal Government or any Provincial Government for the purposes of private issue of securities, under any other law for the time being in force.
The "debt security" includes any instrument creating or acknowledging indebtedness which is issued or proposed to be issued by a company including, in particular, debentures, debentures stock, loan stock, bonds, notes, commercial paper, term finance certificates, Sukuk or any other conventional or Islamic debt security of a company, whether constituting a charge on the assets of the company or not, SECP said.
Any company, except a single member company, is eligible to offer and issue its securities through private placement under these rules, it said. Conditions for issue of further share capital through private placement: Subject to section 86 of the Ordinance, a company may issue further share capital through private placement subject to the following conditions, namely:
Firstly, the company shall obtain the required approvals under section 86 of the Ordinance for issue of further share capital. Secondly, the offer or invitation to subscribe to shares shall not be made to more than fifty persons. Provided that the above restriction shall not apply to shares offered to Qualified Institutional Buyers and employees of the company under an Employees Stock Option Scheme in accordance with sub-section (1) of section 86 of the Ordinance. If a company makes an offer to more than the prescribed number of persons, the same shall be deemed to be a public offer of securities and shall accordingly be governed by the provisions of Part VIII of the Act.
The company shall comply with all the other requirements prescribed in the Ordinance and the rules, regulations or guidelines made there under for issuance of further share capital and the company shall not release any public advertisements or utilize any media, marketing or distribution channels or agents to inform the public at large about such an offer.
The company shall not make more than two private placements in any financial year. The shares are offered through information memorandum which contains minimum information as specified.
The company shall ensure that proceeds of the issue are utilized in the form and manner as disclosed in the information memorandum and all monies payable towards subscription of share capital shall be paid through cheque or demand draft or other banking channels but not by cash.
In case of debt security, the company shall, within thirty days of the closing of subscription period, report the issue to the Commission on the format as specified in Schedule-II to these rules along with a filing fee as specified in sixth schedule to the Ordinance.
In case of debt security, the issuer shall report to the Commission, redemption status in the form and manner specified by the Commission In case of shares, the company shall report the allotment in the form and manner as required under section 73 of the Ordinance along with a filing fee as specified in sixth schedule to the Ordinance.