SECP Imposes New Conditions for Listed Companies Issuing Right Shares

The Securities and Exchange Commission of Pakistan (SECP) has placed additional requirements/conditions for the listed companies for issuance of the right shares.

The SECP issued a notification on Wednesday to propose amendments to the Companies (Further Issue of Shares) Regulations, 2020.

In addition to compliance with the general conditions provided, a listed company issuing right shares shall comply with the following additional requirements:

Under the new regulations, the board of directors of the issuing company shall, prior to the announcement of the right issue, ensure that the issuing company, its sponsor(s), promoter(s), substantial shareholder(s) and directors shall not have overdue or defaults irrespective of the amount appearing in the report obtained from Credit Information Bureau.

The company shall prepare and its board shall approve the draft offer document in easily understandable English and Urdu language.

The offer document shall contain all disclosures, as referred to in Schedule I of these regulations, and such disclosure should be true and adequate and enable the applicants to make an informed investment decision.

The draft offer document shall be submitted to PSX within 45 days of the date of announcement. It shall be the discretion of the company to seek public comments on the offering document and in such case, the company shall simultaneously place the draft offer document on the PSX and company’s website. The public can submit its comments within 7 days of placement.

The PSX shall, within 15 days of the filing of the draft offer document, share its observations and changes with the company, if any; (vi) the board shall ensure that draft offer document is updated in light of the public comments, (if opted for), and PSX comments/observations, and shall submit final offer document to PSX and the Commission within 20 days from the date of comments/observations.

Simultaneously, the Board shall also disclose in tabular form on PSX and company website as per the Schedule II, all the comments received along with the explanations as to how they are addressed; (vii) the final offer document shall be placed on PSX website along with book closure dates, and relevant right issuance timelines in accordance with Section 83 of the Act; and (viii) the sponsors shall retain their entire shareholding for one year or project completion whichever is later, SECP added.

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