Issuance of shares, bonus issue: SECP issues new conditions for listed companies

The Securities and Exchange Commission of Pakistan (SECP) has issued new conditions for listed companies for issuance of right shares, bonus issue and further shares. The SECP has issued Companies (Further Issue of Shares) Regulations, 2020 here on Monday.

The Companies (Further Issue of Shares) Regulations, 2020 shall apply to the companies issuing further capital by way of right shares; other than right shares; bonus shares; employee stock option schemes and shares with different rights including preference shares.

Under the conditions for right issue, a listed company issuing right shares shall comply with the following general conditions: Board shall approve the decision to increase share capital and the said decision shall be communicated on the same day to the Commission and to the securities exchange for public dissemination.

Fractional shares, if any, shall not be offered and all fractions less than a share shall be consolidated and disposed of by the company and the proceeds from such disposition shall be paid to such of the entitled shareholders as may have accepted such offer. The decision of board shall clearly state the quantum of the issue i.e. as percentage of existing paid-up capital; issue size; issue price; purpose of the issue; utilization of the proceeds of the issuer; benefits of the issue to the company and its shareholders; risks, if any, associated with the issue to which the company and/or its members are exposed to justification for issue of shares at, premium or at discount to face value (if applicable).

Subject to compliance with the requirements of section 82 of the Act, a company may issue right shares at discount to face value provided the issue is underwritten in the form and manner as stated.

The book closure for the issue shall be made within thirty days from the date of the board's resolution or within such time period as approved by the Commission. In case of a listed company, the resolution of board approving to issue right shares shall be communicated to the Commission and the securities exchange on the same day i.e. on the day of the decision. In case of a listed company, the letter of offer of right shall be dispatched or credited within the time period as specified by the listings regulations of the securities exchange. Right issue once announced by the board of a listed company shall not be varied, postponed, withdrawn or cancelled.

A company, in accordance with the provisions of its articles of association, may issue bonus shares. This is subject to the condition that the issue of bonus shares is approved by the board. In case of a listed company, the resolution of board approving to issue bonus shares is communicated to the Commission and the securities exchange on the same day i.e. on the day of the decision. The decision of the board to issue bonus shares, once announced, shall not be varied, postponed, withdrawn or cancelled, the SECP added.