ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has notified draft amendments to the Companies (Further Issue of Shares) Regulations, 2020, for eliciting public opinion.
The amendments are aimed at providing greater clarity as well as simplifying the procedure for further issuance of shares by listing companies.
In contrast to the existing procedure, which requires customized disclosures on the basis of issue size, SECP has removed these thresholds and put forward a standardized procedure with uniform disclosure and reporting requirements for all right issues, irrespective of their size.
Nevertheless, the draft regulations call for more comprehensive disclosures within the offering document, aiming to empower investors to make well-informed decisions. These disclosures encompass critical information about the issuer, specific risk factors, and the potential implications of these risks on the company’s operations and performance.
In cases where the further issuance of shares, other than through a right offer, is contingent upon a future event, compliance with certain requirements becomes impractical when seeking approval under Section 83(1)(b) of the Companies Act, 2017. Consequently, proposed amendments are aimed at exempting specific requirements at the time of approval for such transactions.
Furthermore, for individuals other than sponsors, it is proposed to reduce the lock-in period for restricting the sale of shares after issuance to six months, as opposed to the current requirements based on shareholding percentage.
The reporting requirements for both right issues and the issuance of shares, excluding right offers, are being streamlined and aligned with the filing requirements stipulated in the Companies Act, 2017.
A consultation paper outlining the proposed amendments and key considerations has been published on the SECP website for more detailed coverage at https://www.secp.gov.pk/document/consultation-paper-on-draft-amendments-to-the-companies-further-issue-of-shares-regulations-2020/ wpdmdl=49249.
Comments on the draft amendments can be submitted to the SECP within a period of fourteen days from the date of the notification at capitalissuefeedback@ secp.gov.pk.
Copyright Business Recorder, 2023